Introduction: Lord Sugar

Sir Alan Michael Sugar, Knight, having been created Baron Sugar, of Clapton in the London Borough of Hackney, was introduced and made the solemn affirmation, supported by Baroness Vadera and Lord Davies of Abersoch.

Supreme Court
	 — 
	Question

Lord Pannick: To ask Her Majesty's Government what is their assessment of the arrangements for the transfer of judicial functions from the Appellate Committee of the House of Lords to the United Kingdom Supreme Court.

Lord Bach: My Lords, arrangements for the transfer of judicial functions from the Appellate Committee to the new Supreme Court are on time and within budget and will meet the needs of the Supreme Court justices, court users and the public. On behalf of Her Majesty's Government, I take this opportunity to thank the noble and learned Lords, the Law Lords,for the considerable personal contribution that they have made both to this House and to the design and functioning of the new Supreme Court.

Lord Pannick: My Lords, I thank the Minister and associate myself with his remarks. As justices of the Supreme Court who are appointed in the future will not be Members of this House, do the Government propose to ensure that this House will continue to benefit from the experience and expertise of retired senior judges? In particular, will they ensure that all retiring Supreme Court justices in the future are appointed to this House?

Lord Bach: My Lords, justices of the Supreme Court who are appointed after October 2009 will not automatically become Members of the second Chamber on retirement, but could be considered for appointment by the Appointments Commission. It is right to say that former Law Lords will be able to take up their places again in the House of Lords on retirement from the Supreme Court, and it is right that this House needs a lot of expertise, particularly in that field, but I cannot give the noble Lord the assurance that he requires.

Lord Henley: My Lords, to assist the House in appreciating whether this new creation has been value for money, will the noble Lord remind the House just how much the capital costs have been in creating this new Supreme Court and what the additional costs of running this will be, over and above what they would have been if left in this House?

Lord Bach: My Lords, the set-up costs are £58.9 million, a figure which the House knows about and has been agreed. We are coming in within cost and I know that the noble Lord will be delighted to hear that. Running costs for the Supreme Court will be £12.3 million per year. This year, an extra £1.2 million for estimated national insurance contributions and pension contributions of the Law Lords will be transferred from another fund to those running costs. I do not think that the emergence of the Supreme Court will mean that it will cost the taxpayer much more money.
	The new court is a fantastic symbol on Parliament Square. It will bring together the legislature on one side of this historic square, the Executive on another, the judiciary now will be on the third and, of course, the established Church is on the fourth.

Lord Thomas of Gresford: My Lords, I declare an interest. What will happen to the law books in our Library?

Lord Bach: My Lords, I do not know what will happen to the law books in our Library. The new Supreme Court has an excellent Library which will be used by the justices of the Supreme Court.

Lord Davies of Coity: My Lords, will the Minister confirm that the transfer of the Appellate Committee of the House of Lords to the United Kingdom Supreme Court was for the purpose of dividing political and judicial responsibilities? If bringing Lords back into the House on that basis is the case, would it not have been better to leave them here in the first place?

Lord Bach: My Lords, my noble friend is right in half of what he says. It is right that the separation of powers between the judiciary, the legislature and the Executive should be made even clearer, which this move does. However, what it also does—in some ways, this is as important—is to make the most important court in our land much more accessible to the public for whom it is there to serve. Everyone knows that in this building it has not always been possible for the general public, particularly young people, to be able to watch the Law Lords in action. They will certainly be able to do that in the new court.

Lord Lloyd of Berwick: My Lords, would it not be possible for a peerage to be offered as an honour to these distinguished men who have spent their lifetime in the law? If they are expected to play a full part in the work of the House, I suspect that quite a lot of them will not accept.

Lord Bach: My Lords, of course those who are serving Law Lords now and are shortly to become Supreme Court justices will come back with their honour when they retire from the Supreme Court. On the position of those who are made Supreme Court justices after the court is set up, as I have said, we cannot guarantee that they will become life Peers but they will be eligible to become so like everyone else.

Lord Campbell of Alloway: My Lords, does the noble Lord accept that no problems have arisen hitherto or are likely to arise between the Executive and Parliament, and between the judiciary and Parliament?

Lord Bach: My Lords, it is true that the system has worked well, but it is important, particularly in modern times, that the separation of powers is made absolutely clear. We think that this is one of the advantages—not the only advantage, but one of them—of the change that has been made. The other—I shall repeat it because it is important—is accessibility to the highest court in the land.

Lord Grocott: My Lords, while some of my best friends are lawyers, including my noble friend at the Dispatch Box, does he not agree that it would be quite difficult for an objective observer to suggest that what this House suffers from is a serious shortage of lawyers? Does he therefore agree that in any consideration of the future composition of this House it is vital that we have the widest possible spread of professions and occupations and that places are not given automatically to any particular profession?

Lord Bach: My Lords, I am sure that is exactly the way the Appointments Commission will deal with the matter.

Sudan
	 — 
	Question

Baroness Cox: To ask Her Majesty's Government what is their response to developments in Sudan with regard to the comprehensive peace agreement and the provision of humanitarian assistance.

Lord Tunnicliffe: My Lords, as a witness to the comprehensive peace agreement, the UK is working with all parties for its full and timely implementation. We and other parties reaffirmed our support for the CPA at the Washington forum on 23 June 2009. The UK is the largest European bilateral provider of humanitarian assistance to Sudan, having spent £56 million towards humanitarian aid and early recovery assistance in Sudan for 2008-09.

Baroness Cox: My Lords, I thank the Minister for that encouraging reply. Is he aware of the growing concern that the National Congress Party may resume conflict if it does not agree with a ruling by the Abyei Court of Arbitration to be announced this coming Wednesday, 22 July? That concern is being exacerbated by reports of large numbers of militias dressed in police uniforms, believed to be supported by the NCP, amassing on the border between Muglad and Abyei. Given that the SPLM has agreed to abide by the ruling, whatever it is, will Her Majesty's Government put the strongest possible pressure on the National Congress Party to accept the ruling and to desist from further conflict?

Lord Tunnicliffe: My Lords, we welcome the public commitment made by both parties to abide by the decision of the Permanent Court of Arbitration on the Abyei boundary. The UK urges both parties to ensure that the decision is fully implemented in a timely manner and in a way that does not escalate tensions or cause conflict. This was reiterated by the UN Security Council on 17 July.

Lord Avebury: My Lords, is the Minister satisfied that, further to the Question put by the noble Baroness, UNMIS has enough troops in Abyei to protect civilians from harm in the event of any disturbances and that it will report immediately to the Security Council on who is guilty of any breaches of the ceasefire following the declaration of the arbitration court on Wednesday?

Lord Tunnicliffe: My Lords, I do not think that I can give that assurance. UNMIS will do all it possibly can, but in the end what will achieve acceptance is if the political parties on both sides urge their supporters to accept the ruling.

Baroness Rawlings: My Lords, in the light of possible developments arising from the agreement of the CPA, such as autonomy for the south, equal distribution of oil revenues between the north and the south, and lately a vast real estate boom, it is good news that Her Majesty's Government are providing further humanitarian assistance to those still affected by the conflict. However, what are they doing to redevelop the nation's torn infrastructure?

Lord Tunnicliffe: My Lords, at the moment, the situation in Sudan is essentially about humanitarian issues, reconstructing governance, getting a proper census for the elections, getting the borders agreed, holding the elections and so on. It is crucial that this period of constitutional reform leading to the elections and the referendum goes smoothly. I am afraid that those matters are taking the highest priority in DfID's work.

Lord Clarke of Hampstead: My Lords, I am confident from my noble friend's first reply to the noble Baroness, Lady Cox, that he is aware of the great importance of the comprehensive peace agreement. However, is he as concerned as I am that in the event of this peace agreement not being upheld there will be a further outbreak of war? Can he expand on the recent discussions in Washington and say whether Her Majesty's Government's initiative received proper support from other members of the international community?

Lord Tunnicliffe: My Lords, the north-south war in Sudan was probably one of the most awful wars that the world has seen and we must all pray that the CPA persists. The UK, other witnesses to the CPA and regional partners attended the forum for support of the CPA in Washington. We support the statement issued on 23 June by participants noting the progress made by the parties to the CPA and reaffirming the importance of progress on the CPA for peace and stability in Sudan.

Lord Elton: My Lords, if I heard correctly, there is some irony in the fact that the figures the Minister quoted for aid in the Answer to this Question and the cost of the new judicial structure given in the previous Question were approximately the same. What are we doing to ensure that this money is properly spent?

Lord Tunnicliffe: My Lords, we are very careful in ensuring that the money is properly spent. Perhaps I can answer the question in the negative; none of this money will be spent either through the Government of Sudan or the Government in southern Sudan. All of it will go either through international agencies or direct to NGOs. We are as confident as we can be in such a difficult situation that it will be audited and will all arrive where it is meant to be.

Lord Luce: My Lords, as there is a real danger that if the comprehensive peace agreement breaks down there will be resort to civil war, fragmentation and probably repression in the south, is there not an overwhelming African interest, let alone Western interest, that we do something positive about this and that the British Government play a vigorous role, alongside the other nations, in trying to get this agreement implemented and a settlement brought about in Darfur?

Lord Tunnicliffe: My Lords, I can assure the noble Lord that the Government have Sudan high on their agenda. We appreciate just how important it is. What we are doing is absolutely in line with the White Paper. We recognise the issues of fragile states and the need to bring security as part of our aid. Our influences in that area are the best we can do. It is a unique situation in Sudan, where an African Union and United Nations force exists, and we must all pray that it is successful in maintaining the peace.

Baroness Tonge: My Lords, I declare an interest as a vice-chairman of the All-Party Group on Sudan. Following on from the comprehensive peace agreement, what has the international community been able to do to ensure transparency in the division of the oil revenues between the Government in Khartoum and the Government of southern Sudan so that the people of southern Sudan know exactly how much money their Government have received?

Lord Tunnicliffe: My Lords, the Government, with the international community, are helping in the demarcation and border issues in southern Sudan to ensure that that division is appropriate, and we are helping with the election processes and governance processes related to it. If there is peace and we are able to stick to the CPA, the agreement sets out what the division of wealth and influence would be. The problem is not with the CPA but with maintaining it while it comes into force.

Education: Unauthorised Colleges
	 — 
	Question

Lord Naseby: To ask Her Majesty's Government what is their assessment of the number of unauthorised colleges and the number of false students in the United Kingdom.

Lord Young of Norwood Green: My Lords, we regulate education and training businesses that are in receipt of public funding, not those established as privately funded businesses. However, all education providers offering services to international students now need to be licensed by the UK Border Agency. We do not have estimates of those who entered the UK as students and are now here illegally or of those who entered improperly prior to the introduction of the new points-based system for migration.

Lord Naseby: My Lords, I thank the Minister for that Answer. It is reassuring to hear that the UK Border Agency is now involved. However, should we, or the agency, not have known how many colleges were open? All you needed to do was fill in an online application form. No one ever inspected these colleges, made authorised visits without telling anyone or knew how many students there were. We knew that these colleges existed, though, so why do we not now have a list of them and make sure that every single one of them is closed down? It is too easy for terrorist suspects to come in, not least because the majority came from the north-west region of Pakistan. I would like a reassurance from the Minister that all the former colleges that were offering all sorts of bogus degrees are now inspected and, if found wanting, are closed.

Lord Young of Norwood Green: My Lords, all education providers offering services to international students—that is, those coming from outside the European economic area—now need to be licensed by the UK Border Agency and entered on the sponsor register. To qualify for the register, all private education institutions will need to be accredited by one of a limited number of UKBA-approved accreditation bodies. I can tell the noble Lord that, since the new register and inspection process were introduced, nearly 300 colleges have been removed. We have not yet gone through all of them, but we are making rapid progress.

Lord Tomlinson: My Lords, I declare an interest as chairman of the Association of Independent Higher Education Providers and as a member of the joint education task force. I ask my noble friend to make it abundantly clear that, from this day forth, no student can come to any part of the higher education system, either public or private, unless they are coming to a sponsoring college, which has to be accredited and licensed, and without which no student can apply for a visa. Is not the real problem now not to get the system in place, because it is already there, but to get our high commissions and our embassies overseas issuing visas under the new system so that genuine students can come to this country to get their education without the good brand of British higher education suffering due to the absence of students caused by dilatory procedures now in issuing visas?

Lord Young of Norwood Green: My Lords, I thank my noble friend for both his comment and his questions. I confirm that the processes are as he described. It is important to find the balance between ensuring that people do not enter on false pretences and go to bogus institutions and recognising that international students provide a vital cultural, academic and economic contribution to this country.

Baroness Sharp of Guildford: My Lords, what are the views of the Minister's department on the suggestion from the Association of Colleges that the term "college" be protected by an amendment to the Companies Act, so that any organisation wishing to trade under the term must be authorised by the appropriate authorities?

Lord Young of Norwood Green: My Lords, I can confirm that our department is looking at the arguments for registering all academic institutions. I cannot yet confirm the attitude taken over the word "college", but we will consider the arguments for and against a universal requirement for registration or accreditation over the summer. Officials will invite views and opinions from those with an interest in this business sector and report the findings to the Minister in the autumn for consideration.

Lord De Mauley: My Lords, the British high commission in Pakistan estimates that half of all students to whom it grants visas disappear after reaching the UK. How confident is the Minister that this will now stop?

Lord Young of Norwood Green: My Lords, we are confident that we now have the right processes in place. We have a process in place to deal with the bogus colleges, which was absolutely essential. We have much stronger checks on immigration and a much stronger visa application system. We can be confident about the processes. Systems will need to be checked over a period of time, but the whole process of border control is being enhanced.

Baroness Warwick of Undercliffe: My Lords, as someone who has worked with the UK Border Agency to try to improve the system, I declare an interest as chief executive of Universities UK. Does my noble friend agree that the system risks failure across the board if the IT system that is due to support the student immigration route is not comprehensively tested by the education providers who are going to use it, including the universities? Would my noble friend therefore also agree that the system must be tested to ensure that it can cope with the very considerable increase in student numbers and student data that it is now likely to have to handle?

Lord Young of Norwood Green: My Lords, I probably need to write to my noble friend to give her a comprehensive answer. I certainly agree that we need the system to be as effective as possible. As I said, we do not want to deter genuine international students from making visa applications or making genuine applications to study here.

Baroness Sharples: My Lords—

Lord Hunt of Kings Heath: My Lords, we are well into the 23rd minute.

Railways: Expanding Access to the Rail Network
	 — 
	Question

Lord Grocott: To ask Her Majesty's Government whether they will publish a response to the report of the Association of Train Operating Companies, Connecting communities: expanding access to the rail network.

Lord Adonis: My Lords, the Government welcome any initiative which helps local authorities and other potential promoters of rail services to understand whether the reopening of closed lines is a feasible way of improving links to places not on the rail network.

Lord Grocott: In welcoming both the report by ATOC and my noble friend's response, perhaps I may ask him two questions. First, is the report not yet further evidence of the importance of protecting at least the track bed of closed railway lines and perhaps the structures as well, such as bridges? If old lines are to be reopened, it makes the reopening much easier. Secondly, when local authorities have an interest in possibly reopening a particular line, such as the line from Stafford to Wellington, might support and help be forthcoming from the Department for Transport with looking at business cases? I suppose that I should declare a tangential interest as the honorary president of the Telford Steam Railway.

Lord Adonis: And a very worthwhile organisation, that is, too, my Lords. On the protection of rail routes, PPG13 states that local planning authorities should,
	"protect sites and routes which could be critical in developing infrastructure to widen transport choices for both passenger and freight movements".
	That includes rail-track beds as appropriate.
	On reopening closed lines, my department is happy to work with promoters where there are strong business cases, and we have a set of rules in place for how that work can be taken forward. I commend my noble friend's commitment to the Wellington and Stafford line. However, having secured a copy of the 1961 timetable for that line before it was closed, I would point out that it was not a paragon of good service. There were eight trains a day on that line, and the 18.75 miles managed to take the steam locomotives of the day 45 minutes to complete, which represents an average speed of 24 mph. As my noble friend may know, I am passionately committed to high-speed railway lines and I rather hope that they go a bit faster than 24 mph.

Lord Bradshaw: My Lords, will the Minister join me in congratulating Parry People Movers on introducing rapid lightweight trains between Stourbridge and Stourbridge Junction which successfully carry lots of people, and much better than the railway to which he has just referred? Will he look particularly at the list of potential lines which that company has put forward for using this railcar, particularly as regards enthusiast and freight railways?

Lord Adonis: My Lords, I am very happy to do so. The application of new ways of running railway services much more economically than has been the case in the past is something to which we should pay a good deal of attention. As the noble Lord will know, a tram train trial is about to start, building on very positive experience in Germany of using tram technology on the railways, which makes it possible for trains to run off the classic network and into town and city centres. Again, this could be an important development for the future and I am very keen to see it piloted in the UK.

Lord Mawhinney: My Lords, I am sure that your Lordships' House will be grateful to the Secretary of State for the positive nature of his initial response. Experience suggests that when people wish to extend new lines the business plans seriously underestimate the annual recurrent cost. Could his department publish guidance which would help people have a more realistic assessment of the cost that they are entering into when they wish to extend new lines?

Lord Adonis: My Lords, I would be very happy to do that and to look further at the experience of the Welsh and Scottish devolved Administrations in reopening lines which has been fairly positive in recent years. England may be able to learn from that. However, I note that the Association of Train Operating Companies' report, which led to my noble friend's Question, notes that since 1995, 27 new lines, totalling 199 track miles, and 68 stations have been opened. Therefore, there has been a lot of positive development in this area in recent years.

Lord Berkeley: My Lords, I welcome my noble friend's statement about new lines. Would he consider encouraging the private sector and voluntary groups to be responsible for developing and operating the infrastructure so that there will be some comparison and benchmarking between what they are doing and what Network Rail does—sometimes at a fairly higher cost?

Lord Adonis: My Lords, my noble friend raises a much wider issue than that raised in the original Question. As he knows, in all these matters I am bound by the law, which I am afraid does not allow for the benchmarking which he has in mind.

Lord Walton of Detchant: My Lords, in the light of the noble Lord's encyclopaedic knowledge of the United Kingdom's rail network, is he likely to favour the reopening of the Leamside Line in Durham county, bearing in mind the fact that the Nissan plant in Sunderland has now been chosen to build the new generation of electric cars, and that that line would be invaluable for freight traffic in the area?

Lord Adonis: My Lords, I am afraid that my encyclopaedic knowledge is not coming to the fore sufficiently fast in respect of that line. It is in here somewhere because I looked at it earlier. All I can give is some general encouragement to promoters who are interested in taking that line forward to see if they are capable of generating a good business case, but I do not think that I am allowed to offer any greater encouragement than that.

The Earl of Onslow: My Lords, when a new railway line is opened, could the railway line and the rolling stock be under the control of the same company; in other words, the track would not necessarily be a part of Network Rail but it could be like in the old days when southern railway owned the track as well as the rolling stock?

Lord Adonis: My Lords, as I said in reply to my noble friend Lord Berkeley, the law applies in this area. Network Rail is the track authority for maintaining the national track.

Lord Morris of Handsworth: My Lords, the Minister will be aware that the test of a good transport system is whether it integrates one mode with another. What plans exist within the department to ensure that we move towards an integrated transport system of road and rail?

Lord Adonis: My Lords, that is a very large question which could occupy me for a great deal more than the next two minutes. We are keen to see much greater integration that includes much better facilities for buses interchanging at rail stations. I am keen to see much more car parking at stations, too. The new south central franchise requires there to be at least an additional 1,000 car parking spaces at stations so that it is much easier for motorists to interchange. As my noble friend may be aware, I have been making something of an issue recently about bike parking at stations, which is lamentably inadequate at too many of our stations. As my noble friend may have noticed, I came back from Holland recently, having noted that at the station in the city of Leiden there is parking facilities for 4,500 bikes. In all the central London rail terminals put together, there is parking for 1,200 bikes.
	The Dutch do not cycle because it is in their genes, but because it is made easy for them to park at stations and they are given significant encouragement. I hope that that gives my noble friend some flavour of the activity that we have under way to ensure that we have a more integrated transport policy.

Arrangement of Business

Lord Bassam of Brighton: My Lords, it might be helpful to the House if I say a few words about the arrangements for Report and Third Reading of the Parliamentary Standards Bill today. After the Report stage the Bill, the House will debate the Second Reading of the Finance Bill together with the report of the Economic Affairs Committee. Once Report stage of the Parliamentary Standards Bill has been completed, the Public Bill Office will produce a new print of the Bill as it has been amended on Report. That will be made available in the Printed Paper Office as soon as possible and the message will be displayed to this effect on the annunciators around the House.
	There will then be a period of time for any Member who wishes to do so to table Third Reading amendments. The deadline for Third Reading amendments will also be displayed on the annunciators. If necessary, the Public Bill Office will then produce a Marshalled List of such amendments for Third Reading. It is hoped that all of that can be completed during the Second Reading of the Finance Bill to allow the House to move straight onto the Third Reading of the Parliamentary Standards Bill. I hope that that was clear to all.

Business of the House
	 — 
	Motion on consideration of Commons Amendments

Moved By Baroness Royall of Blaisdon
	That leave be given to advance the consideration of Commons Amendments of the Borders, Citizenship and Immigration Bill [HL] from 21 July to today.
	Motion agreed.

Parliamentary Standards Bill
	 — 
	Order of Consideration Motion

Moved By Baroness Royall of Blaisdon
	That the amendments for the Report stage be marshalled and considered in the following order:
	Clauses 1 and 2, Schedules 1 to 3, Clauses 3 to 13.
	Motion agreed

National Assembly for Wales (Legislative Competence) (Social Welfare) Order 2009

Link to the Grand Committee Debate

National Assembly for Wales (Legislative Competence) (Exceptions to Matters) Order 2009

Link to the Grand Committee Debate

Motions to Approve

Moved By Lord Faulkner of Worcester
	That the draft orders laid before the House on 25 June be approved.
	Relevant document: 19th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 15 July.
	Motions agreed.

Perpetuities and Accumulations Bill [HL]
	 — 
	Third Reading

Baroness Royall of Blaisdon: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the reports of the Perpetuities and Accumulations Bill, has consented to place her prerogative and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Lord Bach: My Lords, I beg to move that this Bill be now read a third time.
	Motion agreed.

Lord Bach: My Lords, I beg to move that this Bill do now pass.
	Bill passed and sent to the Commons.

Borders, Citizenship and Immigration Bill [HL]

Bill Main Page
	Copy of the Bill
	Explanatory Notes
	Amendments

Commons Amendments

Motion on Amendments 1 to 8
	 Moved by Lord Brett
	That the House do agree with the Commons in their Amendments 1 to 8.

Lord Brett: My Lords, with the leave of the House, I beg to move that the House do agree with the Commons in their Amendments 1 to 8. We have listened to the debate, both here and in the other place, and have amended the Bill in order to assure the House on some of the key areas of disagreement. I am also assured that the Bill is better for this.
	Before I introduce group 1, which relates to Part 1 of the Bill, I would like to echo the theme of consensus that has accompanied the Bill both in this House and in the other place. The Government have put on the face of the Bill transitional arrangements on earned citizenship, as requested by this House. They have also brought forward amendments on nationality law and trafficking, having sought agreements with the opposition parties, and proposed a new clause on judicial review in order to meet the concerns expressed in this House. There has been one issue—the common travel area—on which we have not been able to gain the House's consensus, which is unfortunate against a background of great agreement both here and in the other place. Indeed, the chair of the Home Affairs Select Committee, the right honourable Keith Vaz, described the Third Reading debate in another place as a wonderful consensus. I hope, of course, that we can continue that in this House today.
	The amendments on Part 1 that the Government proposed in the other place were a result both of listening to the debate that took place in this place about the definition of customs functions and of internal discussion. Clause 1 enables the Secretary of State to exercise the function of the Commissioners of Customs and Excise concurrently with them in relation to general customs matters. The term "general customs matters" may draw in certain functions already exercisable by the Secretary of State. There was therefore a need to ensure that the other provisions in the Bill—such as the information provisions in Clauses 14 to 20—apply only to the functions of the commissioners that the Secretary of State will be able to exercise under the Bill. Further, the changes made in the other place make it clear that these general customs functions include functions under Community law. The amendments also ensure that adjustments are capable of being made by order under Clause 2 to exclude or include, as appropriate, particular functions from the definition of "general functions of customs".
	Amendments 1 and 2 to Clause 1 have clarified the meaning for the purposes of Part 1 of the Bill of the general customs functions that will be exercisable by the Secretary of State and by general customs officials. Amendment 3 is related to Amendments 1 and 2 and ensures that particular functions can be included or excluded from the definition of general customs functions as appropriate. Amendment 4 reflects the new definition of a general customs function in Clause 1, while Amendments 6, 7 and 8 are consequential on the new definition of a customs revenue function in Clause 7. Taken together with Amendment 5, which clarifies the customs revenue functions under the Bill, they ensure that the information protection regime established in Part 1 applies to all relevant functions, including those under Community law.
	Amendments 11 and 14 are also related. Amendment 11 clarifies the scope of Clause 26, which provides for the making of transfer schemes by HM Revenue and Customs. Amendment 14 defines the new term "Community law" using Clauses 1 and 7. Amendment 9 will insert a new Clause 25, the original of which will be removed by Amendment 10. It will create a revised definition of a short-term holding facility in the new clause. This will allow such facilities to be used either solely for administrative immigration detainees or for a mix of such detainees and persons detained under other powers.
	Amendment 25 makes a necessary change to the schedule consequential on Amendments 9 and 10. Amendments 12 and 13 to Clause 28 are technical amendments to meet the stated policy intention, namely to allow the independent chief inspector to scrutinise the full range of UKBA functions, including whether the Secretary of State and the Director of Border Revenue are exercising their customs functions appropriately. I beg to move.

Lord Henley: In the unavoidable absence of my noble friend Lady Hanham, I hope that the noble Lord will not object if I briefly comment on these amendments. We accept that these amendments, which the Government made in another place, clarify the extent of the customs functions that may be exercised by the Secretary of State and the Director of Border Revenue. This, as the noble Lord will remember, was the subject of much debate in this House earlier this year, and these amendments appear to go some way towards making sure that the remit of the UK Border Agency in respect of the exercise of its new customs functions is clear. However, we on this side believe that there is still not enough coherence between the many agencies that currently operate at our borders. The Government appear to be inching towards where it should be—that is, recognising that we need a unified border police force. At this stage, however, I do not wish to reopen debates that we had at another stage. I limit my remarks merely to accepting this group of clarifying amendments.

Lord Avebury: I do not quite understand how this works, but our Amendment 9A is grouped with these amendments, despite the fact that the noble Lord has moved a Motion relating only to Amendments 1 to 8.

Baroness Hayman: My Lords, it might be of assistance to the House if I suggest the formality of dealing with Amendments 1 to 8 en bloc. I will then call Amendment 9, which I assume the Minister will move formally, and then call Amendment 9A to give the noble Lord the opportunity to speak specifically to that amendment. Did the noble Lord wish to speak to Amendments 1 to 8?

Lord Avebury: No, my Lords. I was intending to speak to Amendment 9A, which has been grouped with Amendments 1 to 8. I accept what the noble Baroness says.

Lord Brett: My Lords, I am slightly lost. Do I move Amendments 1 to 8?

Lord Henley: My Lords, if I can assist the noble Lord, it is being suggested that he formally move Amendments 1 to 8.

Lord Brett: That is what I thought, my Lords.
	Motion on Amendments 1 to 8 agreed.
	Motion on Amendment 9
	 Moved by Lord Brett
	That the House do agree with the Commons in their Amendment 9.
	9: Insert the following new Clause—
	"Short-term holding facilities
	In section 147 of the Immigration and Asylum Act 1999 (c. 33) (removal centres and detained persons: interpretation), in the definition of "short-term holding facility"—
	(a) after "used" insert "—(a)", and
	(b) at the end insert ", or
	(b) for the detention of—
	(i) detained persons for a period of not more than seven days or for such other period as may be prescribed, and
	(ii) persons other than detained persons for any period.""
	Amendment to the Motion
	 Moved by Lord Avebury
	9A: Line 12, leave out "any period" and insert "not longer than six hours"

Lord Avebury: My Lords, I think that we are on the right track now, even though, as we believe, there are serious defects in Amendment 9. The Government proposed to scrap very late in the day the amended definition of "short-term holding facilities" that they had introduced in the Lords with the new clause now before us in Amendment 9. The Minister explained that he and the UK Border Agency had belatedly realised that the original clause would have redesignated immigration and removal centres, and some prisons and police cells, as short-term holding facilities—something that ILPA had been pointing out to them right from the moment that their Amendment 34 was first tabled.
	Section 147 of the Immigration and Asylum Act 1999, as amended, would now define "short-term holding facilities" as,
	"a place used,
	(a) solely for the detention of detained persons for a period of not more than seven days or for such other period as may be prescribed",
	or,
	"(b) for the detention of—
	(i) detained persons for a period of not more than seven days or for such other period as may be prescribed, and(ii) persons other than detained persons for any period".
	Unfortunately, this new clause does not solve the problem. The definition now includes any police station or prison where a mixture of very different types of person could be held and, in the case of the existing facilities, it would allow non-immigration detainees to be held there virtually indefinitely.
	The UKBA accepts that, technically, prisons and police cells will be within the definition. However, can the rules on short-term holding facilities apply in these places? Under the Government's amendment, a person may be held in a short-term holding facility under any detaining power exercisable by any agency of the state and, if he is not an immigration detainee, for any length of time.
	Short-term holding facilities are manifestly unsuitable for that. It would be harmful to the welfare of all that are held in such facilities if they were to be used in this way. We are struggling to get this right after several attempts, because we have been trying to encompass a whole range of detention facilities, where different classes of persons are held for a variety of purposes, in one definition. The immigration Acts confer powers on immigration officers to detain individuals for short periods but, as Mr Woolas, the Minister, said in another place:
	"At present, short-term holding facilities may be used to hold only individuals who have been detained for immigration purposes under UKBA's administrative powers of detention, and those who have been detained under section 2 of the UK Borders Act 2007, pending the arrival of a police officer".—[Official Report, Commons, 14/7/09; col. 179.]
	The Customs and Excise Management Act 1979 confers arrest powers on customs officials who may also need to detain persons for short periods while awaiting the arrival of a police officer. We agree that it is a sensible use of these facilities to allow them to be used by HMRC to detain people for up to six hours, or longer in accordance with the PACE clock where they have been designated for PACE.
	Otherwise, Section 2 of the UK Borders Act limits the period of detention to three hours, pending the arrival of a police officer, while HMRC officials' powers are limited to six hours in custody suites or HMRC offices before the suspect has to be transferred to a police station, where, of course, the PACE codes apply, as the noble Lord, Lord West, helpfully explained in his letter of 7 April. We think that it would have been correct legally and in practice to distinguish between, on the one hand, the places where these people can be held, together with persons arriving in the UK—while consideration is being given to their admission—and persons being removed from the UK who are awaiting a flight, and, on the other, places where people need to be held for longer periods under different provisions of the immigration or customs Acts, such as Schedules 2 and 3 to the 1971 Act, which allow detainees to be held for up to five days to examine or remove in places specified in the Immigration (Places of Detention) Direction 2009.
	At this late stage, we will obviously not come up with a viable set of definitions that would distinguish between the classes of detainees and the places where they may be detained. However, we would like an undertaking that the power to detain people, other than detainees, at the existing short-term holding facilities will not be exercised until the Secretary of State has consulted the Children's Commissioner, the Chief Inspector of Prisons and the independent monitoring boards, which have been severely critical of the suitability of the facilities at Heathrow and Gatwick, even for the limited purposes to which they are being applied at the moment.
	Since the statutory instrument establishing the short-term holding facilities rules has not yet seen the light of day, presumably the Government will not implement this clause when it comes into effect, technically on Royal Assent. We would like the Minister to confirm that and to assure us that the powers will not be used in this way until the relevant statutory instrument has been passed by both Houses of Parliament. We understand that the SI will say that the rules do not apply to prisons or police stations, which avoids the problem of conflict between these rules and those already applying in prisons and police stations. That means that the scheme established by Parliament in the 1999 Act for regulating removal centres and short-term holding facilities would no longer apply, or would apply only in part, to some of the places designated.
	The Bill was intended to be an interim step towards simplification of the law on immigration, but this clause, like much of the rest of the Bill, makes for greater complexity by designating places as short-term holding facilities despite the intention that they are not to be treated as such. We have retabled the amendment that was tabled by my honourable friends in another place on Report. This would ensure that detention in the short-term holding facilities under HMRC and court powers could not exceed a maximum of six hours. The questions asked by the noble Baroness, Lady Hanham, about the grotesquely inadequate facilities at Heathrow—highlighted as recently as April by the independent monitoring board—illustrate the dangers of allowing longer periods of detention in places that have no sleeping and woefully inadequate washing and toilet facilities. It is all very well for the Minister to say that the UKBA has an action plan for remedying these deficiencies, but it is dependent on BAA to provide the premises and equipment. That is bound to take some time, while the powers that we are being asked to confer on the Government come into effect immediately. I hope that we have the support of the Conservative Benches in a matter that has so exercised the noble Baroness, Lady Hanham. I beg to move.

Lord Henley: My Lords, before the noble Lord responds—although I would like to hear his response—I had better quickly deal with the concerns raised by the noble Lord, Lord Avebury, in his Amendment 9A, which would limit the length of time for which persons who fall outside the strict definition of "detained persons" may be held.
	By mixing up the uses to which short-term holding facilities—in other words, where different classes of person are held in the same facilities—can be put, the rules have a potential to cause confusion. However, we on these Benches see the case for flexibility in allowing holding facilities to be used to hold different types of person when the need arises. What matters in all the different cases is that staff at the holding facilities should be clear about what rules apply to which detainees. It seems now to us that the best way to do that is to set it out in rules in an easy-to-understand format, so that the rights and protections afforded by law to individuals who are being held are not breached accidentally. It is probably easier to do that through secondary legislation and codes of practice than by placing such provisions in the Bill.
	I assure the Minister that we will be firm in holding the Government and their agents to adhering to any codes of practice. However, for those reasons, we cannot at this stage offer support to the noble Lord, Lord Avebury.

Lord Brett: My Lords, I appreciate the concern of the noble Lord, Lord Avebury, in tabling this amendment and I should be grateful if he would let me explain why I cannot accept it, although I appreciate many of the points that he raised. I hope that I can give assurances and comfort that will allow him to withdraw the amendment.
	The amendment would restrict to six hours the period of detention in a short-term holding facility of persons other than administrative immigration detainees. As the noble Lord said, the amendment was tabled at Report, when we made it clear why we could not accept it. The wording of the second limb of the new definition of a STHF may look at first sight to be broader than it will be in practice. Let me explain.
	The only people whom we want to hold in STHFs, in addition to administrative immigration detainees, are those who have been arrested in connection with an immigration or customs offence. These people are subject to the protections of PACE. The only reason why we are tinkering with the established definition of a STHF in the 1999 Act is because that Act refers solely to administrative detention under immigration legislation. As we bring customs functions into the Border Agency, we want to ensure that arrests under immigration and customs legislation can also be caught, to ensure that the facilities of the Border Agency with immigration and customs functions can be used flexibly and efficiently to house all its clientele.
	We should not be misled by the phrase "for any period". This is not an open power to detain anyone indefinitely—far from it. Under PACE, the time limit is six hours, unless the facility has been specifically designated under PACE as a place where people may be held for longer. However, any such designation, and any detention in an STHF with that designation, will be subject to all the procedures and protections that PACE requires when detaining for more than six hours.
	Our proposed revision to the definition of a short-term holding facility would have no effect whatever on the relevant time limits that would apply to a person's detention or custody in those facilities, including those that apply to an arrested person whose detention is regulated by the provisions of PACE. We do not need to set a time limit because PACE already provides all the necessary limits in criminal cases. In accordance with the provision that we are making elsewhere in Part 1, where an arrested person is detained in a short-term holding facility, appropriate obligations and safeguards in PACE, or the equivalent order in Northern Ireland, will continue to apply.
	Under the proposals in the Bill, individuals who have been arrested on suspicion of committing an offence, whether immigration or customs, may be detained for up to six hours in a short-term holding facility, or where such a facility has been designated for the purposes of PACE or the PACE (Northern Ireland) Order as a place of detention for longer than six hours, in accordance with the time limits prescribed by PACE, which could clock up to a maximum of 96 hours. There is, therefore, no need to specify a time limit in the definition itself.
	I emphasise again that in all cases there will be no change to the relevant powers of arrest and detention, no change to the statutory protections that would apply to individuals held in a short-term holding facility and no change to the relevant statutory time limits that apply at present. To turn that around, I reassure noble Lords that the revised definition of a short-term holding facility does not in any way create new powers of arrest, detention or custody. It simply allows for the possibility of such facilities being used in a more flexible and efficient way to support the work of the UK Border Agency and any joint operations carried out with HMRC.
	The noble Lord asked a number of questions. He asked whether the regulation would be the subject of a statutory instrument. It will. The rules for short-term holding facilities will be brought forward in the next few months. They will set out the standards and protection that will apply to immigration detainees in police cells and prisons and they will provide the reassurance that I have given that PACE will apply if people are detained in police stations or prisons. In broad terms, they will reflect the framework of those locations, modified as appropriate to reflect the non-criminal nature of immigration detention.
	The noble Lord asked when this will come into effect. It will come into effect at Royal Assent. It is not our intention to delay its practical application, but I give an assurance that it will be applied in a way that will be consistent with the statutory instrument that will be introduced in the next few months.
	The noble Lord asked a further question on consultation. I can give the assurance that we will consult the organisations that he named, including the Children's Commissioner and appropriate NGOs. I hope that, on the basis of this explanation, the noble Lord will withdraw his amendment.

Lord Avebury: My Lords, I appreciate the care with which the Minister responded to the questions that I asked. In particular, I am grateful for the Government's assurance that people will not be held in short-term holding facilities for longer than six hours, except where the PACE codes permit. I am particularly concerned about the use of short-term holding facilities at Heathrow and Gatwick airports, about which very serious criticisms have been made by the independent monitoring boards—to which attention has been drawn repeatedly by the noble Baroness, Lady Hanham, in a series of Written Questions—about the adequacy of the facilities, even for detention for short periods of six hours, for which they are supposed to be used now. If they are now going to be used, under this definition, for detentions under PACE provisions that allow a 96-hour contingency, they are totally unsuitable for the purpose.
	The Minister in the Commons gave an assurance that there was an action plan to upgrade the facilities in accordance with the recommendations of the independent monitoring board. However, that will depend on the good will of the British Airports Authority and its ability to provide the capital and resources for the extension of the facilities. It would still be wrong to allow persons to be detained in facilities that are not suitable even for overnight accommodation, because they lack bedding, a toilet or adequate washing facilities.
	However, as we are not going to get the support of the Conservatives for the amendment, there is no point in pressing it to a Division. We will keep a close eye on how these facilities are used and we hope that the bodies that I mentioned, including the Children's Commissioner, the Chief Inspector of Prisons and the independent monitoring boards, will also ensure that unsuitable places are not used for keeping people for as long as the PACE code allows until the upgrading promised in the action plan has been accomplished. In the mean time, I beg leave to withdraw the amendment.
	Amendment withdrawn.
	Motion on Amendment 9 agreed.
	Motion on Amendments 10 to 14
	 Moved by Lord Brett
	That the House do agree with the Commons in their Amendments 10 to 14.
	Motion on Amendments 10 to 14 agreed.
	Motion on Amendment 15
	 Moved by Lord Brett
	That the House do agree with the Commons in their Amendment 15.
	Motion on Amendment 15 agreed.
	Motion on Amendment 16
	 Moved by Lord Brett
	That the House do agree with the Commons in their Amendment 16.

Lord Smith of Clifton: My Lords, we very much welcome the Government's acceptance in the other place last week of the arguments put forward both in this House and there about the great benefits of the common travel area to the United Kingdom, and Northern Ireland in particular. We are pleased that the Government will not press ahead with their plans to introduce immigration checks for those travelling between the Republic of Ireland and Great Britain and we thank them for listening to the concerns of this House and the other place.
	However, I have one question for the Minister. Can he confirm that the Government will not go ahead with their proposed ad hoc checks on the border between Northern Ireland and the Republic? As discussed in Committee and on Report, concerns have been expressed in Northern Ireland that there could be a danger of racial profiling for people who are stopped, because they would need to satisfy the requirement of proving their identity in such a way that might well lead to ad hoc identity checks. We would very much welcome an assurance from the Government that such checks are now not possible and that they will not take place.

Lord Brett: My Lords, I explained in moving the first group of amendments that unfortunately consensus has not been reached on the common travel area. Although the Government have indeed removed the proposal from the Bill concerning a common travel area, we think that it is still an area of concern in terms of security against terrorism and serious crime. However, the Government recognise the will of the House and therefore have withdrawn that part of the Bill.
	We are of course concerned that both political and practical considerations mean that fixed or routine controls on the land border are not a viable option. However, that does not mean that we should not have the power under Section 10 of the 1971 Act to make an Order in Council provision, should it prove necessary, to deal with those who arrive by sea or air. We are considering ways to take forward the deletion of the CTA clause from the Bill and we believe that we should restore the status quo under the 1971 Act while this consideration takes place. The Minister in another place made it clear on Tuesday—reported at col. 238 of Hansard—that the Government still believe that the CTA amendments are needed. Pursuing such amendments would require new proposals to be brought forward to Parliament at a later date, but no decision has been taken as to when or in what form such proposals will be made. There will be no new immigration checks at the land border at this stage.
	Motion on Amendment 16 agreed.
	Motion on Amendments 17 to 19
	 Moved by Lord Brett
	That the House do agree with the Commons in their Amendments 17 to 19.

Lord Thomas of Gresford: My Lords, the Government have made considerable concessions in this area. Your Lordships will recall that we were united across parties, and Lord Kingsland, in particular, was very forceful on the subject of the transfer of judicial reviews to the new tribunal system. However, the Minister has now introduced a new clause, which means that no immigration or nationality law judicial review will be able to be transferred to the upper tribunal, except those which challenge a decision by the Secretary of State not to treat further submissions as a fresh asylum or human rights claim.
	There has been compromise on all sides in reaching the position that we now have with the government amendments. We have accepted that the issue of fresh claims needs to be dealt with speedily, as the judiciary have consistently argued, and the Government have accepted the need to come back with primary legislation in order to transfer further classes of cases into the new tribunal system. Therefore, we welcome the Government's amendments.

Lord Lloyd of Berwick: My Lords, as the noble Lord has just explained, this amendment goes some way to meeting the concerns held by Lord Kingsland and I on Report. It is extremely complicated, but the problem was the omission of condition 4 as a condition which had to be met before judicial review cases could be transferred from the High Court to the new tribunal. Now, new condition 5 has been inserted in much less strict terms than the old condition 4. As I understand it—I hope I am right—if condition 5 is satisfied, judicial review applications must be transferred, but if it is not, then it is up to the discretion of the High Court judges whether an application is transferred. I hope that the Minister might be able to confirm that my understanding is correct.

Lord Henley: My Lords, the noble Lord, Lord Thomas, said that the Government have made considerable concessions to the united opposition on this matter. I think the noble and learned Lord, Lord Lloyd, said much the same. I was going to use slightly more robust words and say that it looked to me like a fairly complete climbdown by the Government, for which we are very grateful. As the noble Lord will be aware, Lord Kingsland was very rightly exercised by the Government reneging on a commitment given to this House some time earlier by the noble Baroness, Lady Ashton, that more transfers of judicial functions from the High Court to the tribunal would not be made without Parliament having a proper say. By accepting that no more transfers can be made without primary legislation, we believe that the Government are simply making good their own promise. Therefore, I welcome these amendments which the Government have brought forward.

Lord Brett: My Lords, I am slightly shocked. The noble Lord suggests that there has been a total climbdown by the Government. The Government have listened carefully to the wise words of noble Lords. I feel slightly hurt at being castigated when the Government have listened to the good sense of noble Lords and have moved considerably to meet them. I am genuinely very grateful, not for the combined opposition, but for the great co-operation we have had, none greater than from the late lamented Lord Kingsland, who made a great effort to meet the Government and to help us all to arrive at something which your Lordships could accept. The situation is not quite as the noble and learned Lord, Lord Lloyd of Berwick, understands it. My brief tells me that only fresh claims must be transferred; no other judicial reviews can be transferred at all.
	Motion on Amendments 17 to 19 agreed.
	Motion on Amendments 20 to 23
	 Moved by Lord Brett
	That the House do agree with the Commons in their Amendments 20 to 23.
	Motion on Amendments 20 to 23 agreed.
	Motion on Amendment 24
	 Moved by Lord Brett
	That the House do agree with the Commons in their Amendment 24.

Lord Brett: My Lords, this is a privilege amendment. I beg to move.
	Motion on Amendment 24 agreed.
	Motion on Amendment 25
	 Moved by Lord Brett
	That the House do agree with the Commons in their Amendment 25.

Lord Brett: My Lords, I beg to move that the House do agree with the Commons in their Amendment 25, to which I spoke with Amendment 1.
	Motion on Amendment 25 agreed.

Political Parties and Elections Bill

Bill Main Page
	Copy of the Bill
	Explanatory Notes
	Amendments

Commons Amendments

Motion A
	 Moved by Lord Bach
	That the House do not insist on its Amendments 11 and 12 to which the Commons have disagreed but do disagree with the Commons in their Amendments 12A to 12F in lieu and do propose Amendments 12G to 12N in lieu of those Commons Amendments.
	12G: Insert the following new Clause-
	"Non-resident donors etc
	(1) In section 54 of the 2000 Act (permissible donors), in subsection (1) (circumstances in which party may not accept donation), for paragraph (aa) (inserted by section 8 above) there is substituted-
	"(aa) any declaration required to be made in respect of the donation by section 54A or 54B has not been received by the party; or".
	(2) In subsection (2)(a) of that section (individuals who are permissible donors), for "registered in an electoral register" there is substituted "who is registered in an electoral register and (subject to subsection (2ZB)) satisfies the condition set out in subsection (2ZA)".
	(3) After subsection (2) of that section there is inserted-
	"(2ZA) The condition referred to in subsection (2)(a) is that the individual's liability to income tax for the current tax year (including eligibility to make any claim) falls to be determined (or would fall to be determined) on the basis that the individual is resident, ordinarily resident and domiciled in the United Kingdom in that year.
	In this subsection "tax year" has the meaning given by section 4 of the Income Tax Act 2007.
	(2ZB) The condition set out in subsection (2ZA) applies in relation to a donation only if-
	(a) it is a donation of more than £7,500, or
	(b) when the donation is added to any other relevant benefit or benefits accruing in the same calendar year as the donation, the aggregate amount of the benefits is more than £7,500.
	(2ZC) For the purposes of subsection (2ZB)(b) "relevant benefit" and "accruing" have the meaning given by section 62(3A)."
	(4) After section 54A (inserted by section 8 above) there is inserted-
	"54BDeclaration as to whether residence etc condition satisfied
	(1) An individual making to a registered party a donation in relation to which the condition set out in section 54(2ZA) applies must give to the party a written declaration stating whether or not the individual satisfies that condition.
	(2) A declaration under this section must also state the individual's full name and address.
	(3) A person who knowingly or recklessly makes a false declaration under this section commits an offence.
	(4) The Secretary of State may by regulations make provision requiring a declaration under this section to be retained for a specified period.
	(5) The requirement in subsection (1) does not apply where, by reason of section 71B(1)(a), the individual by whom the donation would be made is a permissible donor in relation to the donation at the time of its receipt by the party."
	(5) In section 56 of the 2000 Act (acceptance or return of donations: general), after subsection (1) there is inserted-
	"(1A) In so far as subsection (1) requires steps to be taken to verify or ascertain whether an individual satisfies the condition set out in section 54(2ZA), the requirement is treated as having being complied with if-
	(a) the individual has given to the party a declaration under section 54B stating that the individual satisfies that condition, and
	(b) the party had no reasonable grounds for thinking that the statement was incorrect."
	(6) In Schedule 6 to the 2000 Act (details to be given in donation reports), in paragraph 1A (inserted by section 8 above)-
	(a) in the heading, at the end there is inserted "or as to whether residence etc condition satisfied";
	(b) at the end of that paragraph (which becomes sub-paragraph (1)) there is inserted-
	"(2) In relation to each recordable donation in the case of which a declaration under section 54B has been given, a quarterly report must either-
	(a) state that no reason was found for thinking that the declaration was incorrect, or
	(b) give details of any respects in which the declaration was found or suspected to be incorrect."
	(7) In Schedule 20 to the 2000 Act (penalties) the following entry is inserted at the appropriate place-
	
		
			 "Section 54B(3) (making a false declaration as to whether residence etc condition satisfied) On summary conviction in England and Wales or Scotland: statutory maximum or 12 months 
			  On summary conviction in Northern Ireland: statutory maximum or 6 months 
			  On indictment: fine or 1 year". 
		
	
	(8) Schedule (Declaration as to whether residence etc condition satisfied) has effect.
	That Schedule makes amendments to-
	(a) Schedules 7, 11 and 15 to the 2000 Act (control of donations to individuals and members associations; to recognised third parties; and to permitted participants), and
	(b) Schedule 20 to the 2000 Act (penalties),
	corresponding to those made by subsections (1) to (7)."
	12H: Insert the following new Clause-
	"Non-resident lenders etc
	(1) After section 71H of the 2000 Act there is inserted-
	"71HZA Declaration that residence etc condition is satisfied
	(1) A registered party must not be a party to a regulated transaction to which this section applies unless the registered party has received a written declaration from each of the other parties to the transaction who is an individual stating that the individual satisfies the condition set out in section 54(2ZA).
	(2) This section applies to a regulated transaction-
	(a) if the value of the transaction is more than £7,500, or
	(b) if the aggregate amount of it and any other relevant benefit or benefits accruing in the same calendar year as the transaction is more than £7,500.
	(3) For the purposes of subsection (2)(b) "relevant benefit" and "accruing" have the meaning given by section 71M(3).
	(4) A declaration under this section must also state the individual's full name and address.
	(5) A person who knowingly or recklessly makes a false declaration under this section commits an offence.
	(6) The Secretary of State may by regulations make provision requiring a declaration under this section to be retained for a specified period.
	(7) The reference in subsection (1) to each of the other parties to the transaction does not include any individual who, at the time the transaction is entered into, is an authorised participant in relation to it by reason of section 71Z1(1)(a)."
	(2) In section 71L of the 2000 Act (offences relating to regulated transactions), after subsection (9) there is inserted-
	"(9A) An offence cannot be committed under subsection (1), (2), (5) or (6) on the basis that a person (P) ought reasonably to have known that a particular individual does not satisfy the condition set out in section 54(2ZA) (and is therefore not an authorised participant) if-
	(a) the individual has given a declaration under section 71HZA stating that the individual satisfies that condition, and
	(b) P had no reasonable grounds for thinking that the statement was incorrect."
	(3) In Schedule 6A to the 2000 Act (details to be given in transaction reports), after paragraph 1 there is inserted-
	"Declaration as to whether residence etc condition satisfied
	1A In relation to each recordable transaction in the case of which a declaration under section 71HZA has been given, a quarterly report must either-
	(a) state that no reason was found to think that the declaration was incorrect, or
	(b) give details of any respects in which the declaration was found or suspected to be incorrect."
	(4) In Schedule 7A to the 2000 Act (control of loans etc to individuals and members associations), after paragraph 4 there is inserted-
	"Declaration that residence etc condition satisfied
	4A(1) A regulated participant must not be a party to a controlled transaction to which this paragraph applies unless the regulated participant has received a written declaration from each of the other parties to the transaction who is an individual stating that the individual satisfies the condition set out in section 54(2ZA).
	(2) This paragraph applies to a controlled transaction-
	(a) if the value of the transaction is more than £7,500, or
	(b) if the aggregate amount of it and any other relevant benefit or benefits accruing in the same calendar year as the transaction is more than £7,500.
	(3) For the purposes of sub-paragraph (2) "relevant benefit" and "accruing" have the meaning given by section 71M(3).
	(4) A declaration under this paragraph must also state the full name and address of the person by whom it is made.
	(5) A person who knowingly or recklessly makes a false declaration under this paragraph commits an offence.
	(6) The Secretary of State may by regulations make provision requiring a declaration under this paragraph to be retained for a specified period.
	(7) The reference in sub-paragraph (1) to each of the other parties to the transaction does not include any individual who, at the time the transaction is entered into, is an authorised participant in relation to it by reason of section 71Z1(1)(a)."
	(5) In paragraph 8 of that Schedule (offences), after sub-paragraph (9) there is inserted-
	"(9A) A person (P) cannot commit an offence under sub-paragraph (1), (2), (5) or (6) on the basis that P ought reasonably to have known that a particular individual does not satisfy the condition set out in section 54(2ZA) (and is therefore not an authorised participant) if-
	(a) the individual has given a declaration under paragraph 4A stating that the individual satisfies that condition, and
	(b) P had no reasonable grounds for thinking that the statement was incorrect."
	(6) In paragraph 9 of that Schedule (transaction reports: transactions with authorised participants)-
	(a) in sub-paragraph (9)(a) and (10), for "paragraphs 2" there is inserted "paragraphs 1A, 2";
	(b) in sub-paragraph (10), after paragraph (b) there is inserted-
	"(ba) any reference to section 71HZA must be construed as a reference to paragraph 4A above;".
	(7) In Schedule 20 to the 2000 Act (penalties) the following entries are inserted at the appropriate places-
	
		
			 "Section 71HZA(5) (making a false declaration as to whether residence etc condition satisfied) On summary conviction in England and Wales or Scotland: statutory maximum or 12 months 
			  On summary conviction in Northern Ireland: statutory maximum or 6 months 
			  On indictment: fine or 1 year" 
		
	
	
		
			 "Paragraph 4A(5) of Schedule 7A (making a false declaration as to whether residence etc condition satisfied) On summary conviction in England and Wales or Scotland: statutory maximum or 12 months 
			  On summary conviction in Northern Ireland: statutory maximum or 6 months 
			  On indictment: fine or 1 year"." 
		
	
	12I: Page 23, line 23, at end insert-
	"(2A) An order under subsection (1) bringing into force any provision of section (Non-resident donors etc) or (Non-resident lenders etc), or Schedule (Declaration as to whether residence etc condition satisfied), may make such supplementary, incidental or consequential provision as the Secretary of State considers appropriate-
	(a) for the general purposes, or any particular purposes, of those sections or that Schedule, or
	(b) in consequence of, or for giving full effect to, any provision of those sections or that Schedule.
	(2B) An order made by virtue of subsection (2A) may make provision amending this Act or the 2000 Act.
	An order that makes any such provision must not be made unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, each House of Parliament."
	12J: Insert the following new Schedule-
	"DECLARATION AS TO WHETHER RESIDENCE ETC CONDITION SATISFIED Schedule 7 to the 2000 Act (control of donations to individuals and members associations)
	1(1) In paragraph 6 of Schedule 7 to the 2000 Act (prohibition on accepting donations from impermissible donors), for paragraph (aa) of sub-paragraph (1) (inserted by Schedule 3 above) there is substituted-
	"(aa) any declaration required to be made in respect of the donation by paragraph 6A or 6B has not been received by the donee, or".
	(2) After paragraph 6A of that Schedule (inserted by Schedule 3 above) there is inserted-
	"Declaration as to whether residence etc condition satisfied
	6B(1) An individual making to a regulated donee a donation in relation to which the condition set out in section 54(2ZA) applies must give to the donee a written declaration stating whether or not the individual satisfies that condition.
	(2) A declaration under this paragraph must also state the individual's full name and address.
	(3) A person who knowingly or recklessly makes a false declaration under this paragraph commits an offence.
	(4) The Secretary of State may by regulations make provision requiring a declaration under this paragraph to be retained for a specified period.
	(5) The requirement in sub-paragraph (1) does not apply where, by reason of section 71B(1)(a), the individual by whom the donation would be made is a permissible donor in relation to the donation at the time of its receipt by the donee."
	2 In paragraph 8 of that Schedule (acceptance or return of donations), after sub-paragraph (1) there is inserted-
	"(1A) In its application in accordance with sub-paragraph (1), section 56(1A)(a) shall have effect as if the reference to a declaration under section 54B were construed as a reference to a declaration under paragraph 6B above."
	3(1) Paragraph 10 of that Schedule (donation reports: donations from permissible donors) (as amended by Schedule 3 above) is amended as follows.
	(2) In sub-paragraph (1)(b), after "paragraph 6A" there is inserted "or 6B".
	(3) In sub-paragraph (5), at the end of paragraph (aa) there is inserted ", and any reference to section 54B shall be read as a reference to paragraph 6B above".
	Schedule 11 to the 2000 Act (control of donations to recognised third parties)
	4(1) In paragraph 6 of Schedule 11 to the 2000 Act (prohibition on accepting donations from impermissible donors), for paragraph (aa) of sub-paragraph (1) (inserted by Schedule 3 above) there is substituted-
	"(aa) any declaration required to be made in respect of the donation by paragraph 6A or 6B has not been received by the recognised third party; or".
	(2) After paragraph 6A of that Schedule (inserted by Schedule 3 above) there is inserted-
	"Declaration as to whether residence etc condition satisfied
	6B(1) An individual making to a recognised third party a donation in relation to which the condition set out in section 54(2ZA) applies must give to the recognised third party a written declaration stating whether or not the individual satisfies that condition.
	(2) A declaration under this paragraph must also state the full name and address of the person by whom it is made.
	(3) A person who knowingly or recklessly makes a false declaration under this paragraph commits an offence.
	(4) The Secretary of State may by regulations make provision requiring a declaration under this paragraph to be retained for a specified period."
	5 In paragraph 7 of that Schedule (acceptance or return of donations), after paragraph (a) of sub-paragraph (2) there is inserted-
	"(aa) section 56(1A)(a) shall have effect as if the reference to a declaration under section 54B were construed as a reference to a declaration under paragraph 6B above; and".
	6 In paragraph 9A of that Schedule (inserted by Schedule 3 above)-
	(a) in the heading, after "paragraph 6A" there is inserted "or 6B";
	(b) at the end of that paragraph (which becomes sub-paragraph (1)) there is inserted-
	"(2) In relation to each relevant donation falling with paragraph 10(2) in the case of which a declaration under paragraph 6B has been given, the statement must either-
	(a) state that no reason was found for thinking that the declaration was incorrect, or
	(b) give details of any respects in which the declaration was found or suspected to be incorrect."
	Schedule 15 to the 2000 Act (control of donations to permitted participants)
	7(1) In paragraph 6 of Schedule 15 to the 2000 Act (prohibition on accepting donations from impermissible donors), for paragraph (aa) of sub-paragraph (1) (inserted by Schedule 3 above) there is substituted-
	"(aa) any declaration required to be made in respect of the donation by paragraph 6A or 6B has not been received by the permitted participant, or".
	(2) After paragraph 6A of that Schedule (inserted by Schedule 3 above) there is inserted-
	"Declaration as to whether residence etc condition satisfied
	6B(1) An individual making to a permitted participant a donation in relation to which the condition set out in section 54(2ZA) applies must give to the permitted participant a declaration stating whether or not the individual satisfies that condition.
	(2) A declaration under this paragraph must also state the individual's full name and address.
	(3) A person who knowingly or recklessly makes a false declaration under this paragraph commits an offence.
	(4) The Secretary of State may by regulations make provision requiring a declaration under this paragraph to be retained for a specified period."
	8 In paragraph 7 of that Schedule (acceptance or return of donations), after paragraph (a) of sub-paragraph (2) there is inserted-
	"(aa) section 56(1A)(a) shall have effect as if the reference to a declaration under section 54B were construed as a reference to a declaration under paragraph 6B above; and".
	9 In paragraph 9A of that Schedule (inserted by Schedule 3 above)-
	(a) in the heading, after "paragraph 6A" there is inserted "or 6B";
	(b) at the end of that paragraph (which becomes sub-paragraph (1)) there is inserted-
	"(2) In relation to each relevant donation falling with paragraph 10(2) in the case of which a declaration under paragraph 6B has been given, the statement must either-
	(a) state that no reason was found for thinking that the declaration was incorrect, or
	(b) give details of any respects in which the declaration was found or suspected to be incorrect."
	Schedule 20 to the 2000 Act (penalties)
	10 In Schedule 20 (penalties) the following entries are inserted at the appropriate places-
	
		
			 "Paragraph 6B(3) of Schedule 7 (making a false declaration as to whether residence etc condition satisfied) On summary conviction in England and Wales or Scotland: statutory maximum or 12 months 
			  On summary conviction in Northern Ireland: statutory maximum or 6 months 
			  On indictment: fine or 1 year" 
		
	
	
		
			 "Paragraph 6B(3) of Schedule 11 (making a false declaration as to whether residence etc condition satisfied) On summary conviction in England and Wales or Scotland: statutory maximum or 12 months 
			  On summary conviction in Northern Ireland: statutory maximum or 6 months 
			  On indictment: fine or 1 year" 
		
	
	
		
			 "Paragraph 6B(3) of Schedule 15 (making a false declaration as to whether residence etc condition satisfied) On summary conviction in England and Wales or Scotland: statutory maximum or 12 months 
			  On summary conviction in Northern Ireland: statutory maximum or 6 months 
			  On indictment: fine or 1 year"." 
		
	
	12K: Page 59, line 30, at end insert-
	"( ) In that section as amended by sub-paragraph (1)-
	(a) after "section 54A" there is inserted "or 54B";
	(b) after "paragraph 6A" there is inserted "or 6B"."
	12L: Page 60, line 6, at end insert-
	" In section 71H (authorised participants), after subsection (3) there is inserted-
	"(3A) For the purposes of subsection (3), any reference to a donation in section 54(2ZB) is to be read as a reference to a regulated transaction.""
	12M: Page 61, line 20, at end insert-
	"( ) In sub-paragraph (3) of that paragraph (inserted by sub-paragraph (2) above), after "paragraph 6A" there is inserted "or 6B"."
	12N: Page 61, line 33, at end insert-
	"( ) In sub-paragraph (3) of that paragraph (inserted by sub-paragraph (2)(b) above), after "paragraph 6A" there is inserted "or 6B"."

Lord Bach: My Lords, I beg to move Motion A, that this House do not insist on its Amendments 11 and 12, to which the Commons have disagreed, but do disagree with the Commons in their Amendments 12A to 12F in lieu and do propose Amendments 12G to 12N in lieu of those amendments.
	These amendments propose to add to the permissibility and declaration requirements relating to donations and loans from individuals. They respond to the amendments tabled by my noble friend Lord Campbell-Savours in this place, which were well supported across a wide spectrum of the House. They were debated extensively in another place a week ago, and I believe that, in their revised form, they strike an appropriate balance between addressing the concern that is clearly so well supported and ensuring the new restriction is fair and proportionate.
	These amendments propose to add to the existing criteria in the 2000 Act that govern the permissibility of individuals making political donations or loans. They provide that individuals giving or loaning more than £7,500 to a political party or other regulated recipient must be resident, ordinarily resident and domiciled in the UK for the tax year in which the relevant donation or loan is made. This requirement applies irrespective of whether the donation or loan exceeds the threshold singly or in aggregate over the course of a calendar year. Individuals must make a statement that they are resident, ordinarily resident and domiciled in the UK and provide this along with their donation or loan. Making a false statement is a criminal offence, and a party cannot accept such a donation without the requisite declaration.
	This requirement is additional to the existing requirement for individuals making political donations or loans to be on a UK electoral register. Importantly, however, the additional restriction applies only to more significant donations or loans: those above £7,500. The existing permissibility requirement of inclusion in an electoral register remains in force at the lower threshold, currently £200, but it is proposed to increase it by this Bill to £500, as I have already mentioned.
	We propose the new restriction to apply to the higher threshold of £7,500 for reasons of fairness and proportionality. That is key and largely addresses a significant concern the Government had with the amendments tabled by my noble friend. As I outlined in debates in Grand Committee and on Report on this Bill, we were concerned at the low level of the restriction in my noble friend's amendments, which in our view amounted to an unfair restriction on individuals' ability to participate in our democratic system. Setting the threshold at £7,500 is much fairer, allowing, as it does, an individual who is not resident, ordinarily resident and domiciled in the United Kingdom to retain the ability, albeit in a newly restricted way, to make donations as a way of participating in our democratic system. The higher threshold also has the important advantage of reducing the burden of compliance for political parties and donors. Enabling an individual who does not meet the new permissibility requirement still to make significant donations that do not exceed £7,500 in a calendar year deals, in our view, with any concern of the sort that was expressed by Members of the opposition in the other place about the compatibility of these proposals with EU law and the ECHR.
	I should briefly outline how the amendments work in respect of aggregation of smaller donations towards the £7,500 threshold.
	The amendments propose to require donations above the recordable threshold—£500, as proposed by the Bill—to the same donee to be accounted for where in aggregate they exceed the £7,500 threshold. This means that if a donor gave a series of donations of £2,000 to a political party, the fourth such donation would need to be accompanied by a declaration and the donor would need to be resident, ordinarily resident and domiciled in the UK at the time of making that donation.
	We have considered whether it is feasible to have a more stringent requirement for the aggregation of all political donations and loans regardless of the recipient, but we have concluded that this would be unworkable in practice, and would impose an excessive burden on donors and more importantly on parties and other recipients. In addition, such a proposal would depart significantly from the way in which the 2000 Act currently requires aggregation to work in the reporting of donations and loans. This is particularly true given that political parties would have no means of ascertaining what other political donations an individual had made, and as such whether or not a declaration was required.
	I stress that the amendments do not provide for parties, the Electoral Commission or Her Majesty's Revenue and Customs to access tax data to verify the accuracy of the residence and domicile status declarations, and as such there is no provision here for the enforcement of the requirements by the Electoral Commission or HMRC. Frankly, it has not been possible to devise such provisions in the time available, given the new onerous and costly data-holding and data-sharing requirements they would be likely to create. More importantly, we believe that it would be challenging to do so in a way that was consistent with the important principle that, without a criminal offence, an individual's tax data are a confidential matter between him or her and HMRC. As such, were an individual to lie in a declaration, it would be for law enforcement agencies to investigate.
	Given the difficulty that parties would have in probing the accuracy of declarations, and in recognition of the largely volunteer nature of our political parties, the amendments propose that where the party,
	"had no reasonable grounds for thinking that the statement was incorrect",
	receipt of a declaration would be treated as meeting the requirement in Section 56(1) of the 2000 Act for a party to take reasonable steps to verify the permissibility of donations.
	If a party had concerns about the accuracy of a declaration, it could seek further information from the donor on a voluntary basis. This might include, for example, a letter from an accountant. If the party had concerns that the donor was not resident, ordinarily resident and domiciled for tax purposes, the party should not accept the donation. In line with the Electoral Commission's overarching guidance-giving role, this new requirement might be an issue on which the commission might usefully give guidance.
	My right honourable friend the Secretary of State for Justice outlined the specific considerations that apply to Northern Ireland, and these provisions address that by ensuring that the requirements do not apply to Irish donors making donations to Northern Ireland parties under Section 71B(1)(a) of the 2000 Act.
	I hope that these amendments will be accepted by the House. We believe that they are a proportionate and effective way of giving effect to the will of Parliament, as clearly expressed in the Division in this House in response to the amendments moved by my noble friend Lord Campbell-Savours. I beg to move.

Lord Tyler: My Lords, I am afraid I still feel that the Bill is a sad example of a terribly wasted opportunity. Ministers' obsession with the illusory consensus has meant that they have never been able to step up to the mark and use the Bill to clean up big-money politics. Because they were so determined to do nothing to cause anxiety to the Conservative Party, they have ended up with doing next to nothing about serious reform. I think all parties said they were determined to achieve such reform, so we regret this.
	However, we are delighted that the consensus across your Lordships' House in support of the amendment tabled by the noble Lord, Lord Campbell-Savours, and ourselves has at least led to the blocking of a very important and dangerous loophole in the law. The amendments put before us by the Minister are certainly a considerably improved package, which we welcome very much. We in this House, across all parties, were determined to prevent multi-millionaire tax exiles from continuing to buy parties and constituencies on a scale of intervention which has hardly been matched since the corruption of pre-1832 rotten boroughs.
	These amendments seem reasonably effective, but in correspondence with the right honourable Mr Michael Wills, the Minister responsible for the Bill in the other place, I raised two continuing concerns, part of which have been addressed in his opening remarks by the Minister, but I want to press him on some details. First, throughout all stages of the Bill, we have been anxious to ensure that the thresholds for reporting and recording donations could be bypassed by making a series of payments, each individually below the threshold, but in aggregate greatly exceeding them. That is obviously an issue to which the Minister paid attention just now. For example, there would seem to have been a danger that a tax exile who is not a permissible donor could simply donate £7,499 on a number of occasions each year and avoid the provisions of this legislation.
	In his response, Mr Wills wrote in his letter that,
	"multiple donations to the same political party, or same MP, which over the course of a year exceeded £7,500, must be accompanied by a declaration of the tax status of the donor, and the donor must be ROD in the UK".
	ROD apparently stands for "resident ordinarily resident and domiciled in the UK". Mr Wills continued:
	"This aggregation requirement applies to donations to different accounting units where those units report to the Electoral Commission via the central party. However, the aggregation requirement does not apply to multiple donations to different recipients (e.g. a party and an MP). This is because we do not believe it is fair to require donors to keep track of their interaction with different entities".
	It is that latter qualification to which the Minister has just referred which really adds to our concern. I hope that the Minister will be prepared to give an explicit assurance that everything possible will be done to monitor the situation and, if necessary, to take steps to avoid any exploitation if a new loophole is discovered. We really need the Government's intention on the record if we are fully to fulfil the intention of your Lordships' House in passing the original amendment.
	Incidentally, I have some difficulty with the suggestion from Mr Wills that donors may be given special treatment if they give money to several MPs. Surely their parliamentary duties are now well funded by official sources, which is something that we have all learnt over recent weeks, and there should be no special treatment for those who donate for their party-political campaigning. What would be the position if a tax exile multi-millionaire decided to give a donation below the threshold to every MP of a particular party? The implication in Mr Wills's letter is that MPs should be treated differently from parliamentary candidates of a different party who stand against them. Surely that cannot be right.
	Our second area of concern has been expressed in both Houses during the passage of the Bill; that is, very proper restrictions should now be put in place to avoid any circumvention by companies controlled by those who are not permissible donors. Mr Wills tells me in his letter:
	"Section 56 of the Political Parties, Elections and Referendums Act 2000 requires donations which are made on behalf of another person to be declared as such",
	and referred to an "agency". It is far from clear whether the constraints of the present Bill are sufficient to make it a firm requirement that any declarations from a company in this category are as rigorously controlled as from a tax exile individual. Again, I hope that the Minister will be able to give us a firm assurance on the record that it is intended that such companies should not be used as a bypass for donations that would otherwise be illegal.
	There are one or two other key changes in the government amendments now before us when compared with those that were considered by the other place. For example, the Government have changed their mind about the reference to the tax year, which is going to be relevant. Previously we were told that the current tax year was unworkable as a reference point, but now we are told that it is possible. Again, perhaps the Minister can enlighten us.
	Having briefly identified two areas of anxiety, I must again reassure the Minister that we think the Bill is somewhat improved by these amendments. As my honourable friend David Howarth said at Third Reading in the other place, we are delighted that the artificial consensus has at last broken down on this specific issue, but we simply regret that it did not break down earlier and more generally. I think that the noble Lord, Lord Campbell-Savours, would agree that it is an important change to which we should all give a warm welcome.
	If all legislation were dependent on Conservative acquiescence and no reform could proceed without all-party support, where would we be? Indeed, at an earlier stage I asked the Minister whether his addiction to consensus would prevent action if his party and the Conservatives were in cahoots on a particular issue and we, the Liberal Democrats, disagreed, but answer came there none. If this Bill fully reflected the intentions of the Hayden Phillips discussions, it would have had more teeth and there would have been more chance of a general reform of the funding of political parties and elections. Nevertheless, we welcome this U-turn and believe that it strengthens the Bill.

Lord Bates: My Lords, I welcome this chance to speak to the Motion before us. If the House will bear with me, it is worth taking a few minutes to recap as to how we come to be in the position we are now in. An attempt was made by Mr Prentice to table an amendment on Report in the other place. The government business managers decided that they did not want the matter to be debated and therefore it came to this place. The noble Lord, Lord Campbell-Savours, took up the amendment and with his characteristic skill and ability in Committee, again on Report and at Third Reading, brought it back here. At that point there was quite strong opposition to it. I shall come to my views shortly, but first I shall quote the Minister:
	"The Government have stated their firm belief that it would be wrong in principle to create an anomaly by introducing extra restrictions on only one form of participation without considering",
	other forms. The other forms to which that remark relates are mentioned earlier in the Minister's speech where he says:
	"As we have said before, the Government recognise and understand the sentiment behind the amendments ... We also recognise, however, that making a donation is just one way in which an individual can participate in our democracy. There are many other ways, ranging from exercising the right to vote in an election to standing as a candidate".—[Official Report, 15/6/09; col. 914.]
	In this sense, by introducing two specific additional tests in respect of donations, the Government said that we would be in danger of creating an "anomaly". I am sure that the Minister will be able to confirm that those were very much his sentiments which he set out in Committee and repeated here.
	A very high quality debate then took place in which many excellent contributions were made. A Division was called and the amendment tabled by the noble Lord, Lord Campbell-Savours, was carried. It went down to the other place, and after what I should say what was a slight delay on the part of the business managers in bringing the Bill back to the Floor of the other place, every indication was given to the press—it was reported in the Guardian, no less—that Mr Straw, the Secretary of State, had stated that the Government Benches would be whipped to vote against the noble Lord's amendments. That was a clearly stated position. Something happened then, we know not what, but there was a Damascus road conversion in the other place and we found that some six pages of amendments, where previously the noble Lord, Lord Campbell-Savours, had sent down a paragraph, were put forward in the other place for consideration. It is interesting that those six pages of amendments have now been superseded by another six pages of different amendments, which brings us to where we are now. It is worth putting on record the circuitous route taken by the legislation and that the previous publicly stated positions of the Minister and the Secretary of State have been turned on their head for no apparent reason.
	Let me set out some of the problems. We remember that when the Bill was introduced the idea was to avoid the possibility of innocent mistakes and to make the process simple and transparent. While there is nothing transparent about the way in which the Government have changed their view and introduced these amendments, certainly the objective was that the Bill should be transparent in the way that it operated. Therefore the transparency of simply registering people on an electoral register which is supplied to each party seemed a simple way forward. Now some additional tests have been introduced. It is worth going through what the tests are and what their implications are and I shall be interested to hear the Minister's response.
	First, on residence, the Explanatory Notes to Part 14 of the Income Tax Act 2007 state in paragraph 2455:
	"The question whether or not a person is UK resident is primarily to be determined in accordance with case law. A limited number of statutory rules either supplement or disapply the case law rules in specific circumstances".
	In other words, there is no statutory definition of residence. Therefore, if this is to appear in the Bill as a test which donors are required to pass, and there is no statutory definition of residence, it could cause a problem. I hope the Minister will touch on these points in his response. I am happy to give way at any stage if he has a specific answer because that would aid the understanding of the House, and not least myself.
	The Explanatory Notes continue:
	"There is no register of UK resident individuals; it would therefore be necessary to provide individuals with information to try to enable them to determine whether or not they are resident in the UK and then require individuals to make a declaration that they are resident at the time they make their donation ... By way of example, a person will always be treated as a UK resident where they spend 183 days or more in the UK".
	That is very clear. They go on:
	"However, where a person spends less than 183 days in a tax year in the UK, but comes to the UK with the intention of spending on average at least 91 days or more in the tax year and they in fact spent on average 91 days or more per tax year over a four year period, then they will be treated as resident from the tax year in which they first come to the UK".
	In case your Lordships do not think that is complicated enough, the Explanatory Notes continue:
	"If however the person's intention failed and they left the UK earlier than expected, then they may not be treated as UK resident from the date upon which they first come to the UK. Clearly one would be unable to determine with certainty until the end of the 4 year period whether or not a person were to be treated as UK resident under this test. This may therefore affect the validity of any donation made to a political party during the 4 year period"
	This is a moot point. In speaking to it, the noble Lord, Lord Tyler, commented on the change which had been made in the other place, along with many others, from the previous tax year to the current tax year. Will the Minister deal with that specific point? The absence of a statutory definition and the four-year aggregate of 91 days' residence are an example of the complexity that we are dealing with here. What would happen in those circumstances?
	The second test that has been introduced relates to domicile. Political parties will have to determine, in relation to every political donation, whether the donor is not a non-domiciled UK resident. HMRC has recently issued the new technical guidance on domicile, consisting of 42 pages. The introduction to this technical guidance stresses the difficulties inherent in the determination of domicile. If we thought that residence was a difficult concept to uphold in the Bill, domicile is even more complex. Add to that complexity another concern about the penalties that would be liable to the party if it accepted an impermissible donation. Again, that is relevant.
	We are dealing here with the difficult concepts of residence and domicile; I think that everyone is agreed on that. Often one's tax status and domicile may be determined retrospectively, yet the Bill is set out to relate to the current year.
	The prohibition on the acceptance of impermissible donations and the duty to return any such donations within 30 days of receipt, in Clause 54(1) and 56(2) respectively, are subject to criminal and civil enforcement regimes. The party and the treasurer are guilty of an offence if the donation is not from a permissible donor and is not sent back to the donor within 30 days of receipt. In addition to the points that have been raised, the Minister referred to the fact that HMRC will not be able to keep these data and there will be no register. The system of policing will therefore not be in place. If HMRC, the Government and the Electoral Commission cannot prove the offence, how can these sanctions be applied to a party treasurer who has just 30 days to understand and test these levels of residency and tax domicile?
	My next point is a very interesting one that has been raised with me. The Minister said that he felt this measure was consistent with the European Convention on Human Rights. I want to test him further on that. In the case of Bowman v United Kingdom, the European Court of Human Rights proved that it would step in to protect the right to freedom of expression even in the case of UK primary legislation designed to regulate the conduct of elections. In Bowman it was found that a spending limit on third parties of £5 imposed in Section 75 of the Representation of the People Act 1983 was an infringement of the right to freedom of expression under Article 10 of the European Convention on Human Rights. There is a statutory responsibility to have an impact assessment; the Minister states in the Bill:
	"In my view, the provisions of the Political Parties and Elections Bill are compatible with the Convention rights".
	Is that still the case? Can the noble Lord still make that statement, given some of the precedents that relate to this?
	Indeed, we extend that through EU law to issues relating to human rights. The Maastricht treaty introduced the concept of Union citizenship. According to Article 18, Union citizens have the right to move and reside freely within the territory of any of the member states, subject to the limitations and conditions contained in the EU treaty and secondary legislation. The European Court of Justice has defined Union citizenship as the "fundamental status" of Union citizens. Union citizens have a right of conditional residence and limited right to equal treatment. On that basis, they therefore have the right as European citizens to participate in and stand for elections in this country. Does the Minister believe that the new test of tax residence is consistent with EU law and the European Convention on Human Rights?
	Section 1 of the Representation of the People Act 1985 permits overseas British citizens to vote at a parliamentary election if they are registered on the electoral roll, were resident at a UK address within the previous 15 years and registered at that address or, if they were too young to be registered, a parent or guardian was registered at that address. The requirement in PPERA that an individual be on the electoral roll therefore already incorporates a test of connection, or involvement, with the United Kingdom. This is important because it is clear that questions will be raised, time wasted and important matters debated if that matter is tested in a prosecution. Does the Minister stand by the statements about the complexity of tax and residence, and their potential for creating anomaly, that he made in Committee and on Report? A simple yes-or-no answer to that would be very helpful.
	Is this the thin end of the wedge? By linking the ability to vote and donate to tax status, the Bill risks establishing a principle that political rights should be in some way based on making a contribution to the state through taxation. Has the Minister considered that aspect and, if so, what is his conclusion?
	I shall touch briefly on some of the observations that have been made by the Electoral Commission, which will be landed with the responsibility for upholding the legislation. In a briefing which I am sure has been circulated to all Members who have an interest in this debate, it expresses concern. It recognises that new Amendments 12G to 12N represent an improvement over Amendments 11 and 12 which were tabled in the other place—I think that we would accept that, too. Page 2 of the document states that,
	"amendments 12G to 12N go some way to addressing our previous concerns. In particular, they appear for the most part to remove the need for those receiving donations that attract the new tax status criterion for permissibility to seek to validate declarations from donors about tax status ... We note that amendment 121 contains a delegated power for the Government to make supplementary provision to give full effect to the new requirements, and we urge the Government to consult with us and with those we regulate, in order to consider what further provision may be necessary".
	The Electoral Commission is therefore saying, "Well, we understand very much what you want to do". The Minister has said, "Well, listen, you might want to do it and it might actually please some Members of this House and the other House that you are attempting to do this, but it is going to be impossible to police"—I think he used the word "impossible". He said that all that can be required is for somebody to make a self-declaration. I think he said that it would be up to the criminal authorities to decide whether an offence had been committed. In other words, there is no access to any information for the Electoral Commission to take the lead on this—a matter that the Bill was meant to tackle.
	I apologise for speaking at length but it is important to place on record legitimate questions about why the Government changed their view—if, indeed, they have done so—from that consistently argued in Committee and on Report to that proposed in these revised amendments. I am sure they recognise that they are now creating an anomaly within the tax system whereby somebody can vote in an election in this country, can stand at an election in this country but cannot give a donation to a party in this country which exceeds the threshold of £7,500. The Minister has accepted that this will be impossible to police. Very serious questions remain about these amendments. The pace at which they have been introduced is likely to lead to great confusion. We desperately wanted clarity from the Bill but we have confusion. That is regrettable and in no way helps the aim to which we all aspire of ensuring that the public have confidence in the system of electoral representation and the working of political parties in this country.

Lord Campbell-Savours: My Lords, I intend to be very brief as I spoke at great length in Committee and on Report. I thank parliamentary counsel and those who drafted these amendments, which tidy up the amendments which we originally moved, for the considerable effort they have made during a very short period. I also thank my noble friend Lord Bach, Mr Wills and Mr Jack Straw for all the work and effort they have put into ensuring that these ideas and principles were transformed into legislation.
	However, I also wish to clarify the following point. At no stage during the handling of this amendment in this House, in Committee or on Report, have I ever indicated that it was intended to target any individual. I have always recognised that people in all political parties might be affected by this. My view has always been, and remains, that this is an issue of principle. It is on that basis that I have moved these amendments. I am grateful to all those, particularly the Liberal Democrats and the Cross-Benchers, for their support on the night of the rebellion when we overturned the Government's measure.

Lord Bach: My Lords, I thank all noble Lords who have taken part in today's debate. I shall discipline myself and not respond at length to this matter. The House has important matters to debate today and tomorrow.
	I am grateful to noble Lords who have thanked the Government for taking the stance that they have. It is not an easy issue and I do not pretend for a moment that it is. However, we have found our way through the thicket. We were always sympathetic to the principle that my noble friend raised but were concerned about its practicalities. I do not say that all those concerns have gone away as that would not be true, but we think that we have found a way through by retaining the principle there and the ability to implement this provision in due course.
	The noble Lord, Lord Tyler, asked me a number of questions, which I shall deal with shortly. Aggregation is not a loophole. The approach in these amendments reflects the approach in the PPERA legislation of 2000. We do not believe that it is workable or fair to expect different recipients of donations to act in the knowledge of donations received by others, which they have no way of knowing about. The approach taken by these amendments is consistent with the 2000 Act. It would be very difficult—even onerous—to expect an MP or other individual party member to check what donations had been received in the same year by other MPs or party members of the same party. It is not at all clear how we could realistically expect someone to go about that task. We must remember that an MP represents a constituency in his or her individual capacity, not as a member of a party, and might well receive donations on that basis. We do not want to undermine that principle.
	A donor could seek to get round the new restriction by giving donations below £7,500 to a large number of MPs of the same party. However, MPs are required to report donations that they receive at the lower threshold of £1,000, to be raised to £1,500 by the Bill, so such behaviour would soon become apparent. Recent events suggest that the public is not well disposed towards those who seek to operate only within the letter of the law without also respecting its spirit.
	As far as companies are concerned, which was the second point raised by the noble Lord, the amendments restrict the permissibility of individuals to give political donations: they do not restrict the permissibility of donations from companies. Amendments on company donations would be out of scope. However, Clause 8 of the Bill requires a declaration to accompany donations above £7,500 about the source of the donation. That is intended to ensure that any agency arrangement is properly declared. Therefore, if an individual gives money to a company, another person or entity with the intention that that money is given as a political donation, that arrangement ought to be declared and the individual treated as the donor.
	We have and continue to have sympathy with the point made by the noble Lord, Lord Tyler, on this, but there remains a serious concern about how such a restriction could be introduced in practice. In particular, there would be no easy way for parties to establish the make-up of a company's shareholder register. Those amendments were therefore not accepted and were returned to at a subsequent stage of the Bill. The noble Lord's last point that I want to answer was that Members of Parliament could receive up to £7,500 each from non-residents for tax purposes but candidates could not. He made that distinction. Where candidates are members of a political party, they are regulated under PPERA as a regulated donee, and as such, are covered by these amendments. Independent candidates are only regarded in the period preceding an election under the Representation of the People Act 1983, as amended. As such, they are not subject to the requirements in PPERA nor by these amendments. To suggest that donations to candidates are unregulated is not strictly fair or true. Indeed, most candidates are party members, so are captured by these requirements.
	I do not seek to try to answer all the points made by the noble Lord, Lord Bates. I am sure that he enjoyed himself immensely in his speech by pointing out what had been said in earlier debates on the Bill. If that gave him and the House satisfaction, so be it.

Lord Bates: My Lords, the Minister cannot get away with that. It is not a question of satisfaction. It is a question of what the Government said in this place—what he put on record, speaking on behalf of Her Majesty's Government—and what Her Majesty's Government then said in the other place just a couple of weeks later.

Lord Bach: My Lords, the strength of feeling that the noble Lord showed today on this issue was not shown in the Division Lobby on Report when he led 40 of his own side into the Division Lobby in the vote that, I acknowledge, Her Majesty's Government lost. There was a lot of feeling on this side, as well as in other parts of the House, against the Government's position.
	Now, what do we do? We look and see what the strength of feeling is. We know that there were 218 names on an Early Day Motion in another place, well before the matter came to this House. We had the result of the vote in this place on Report. There clearly was a great deal of feeling in both Houses of Parliament that, on this issue, the line that the Government had taken was not the right one. So are Governments to be entirely stubborn, or should Governments do what they can to try to make what we have always argued is a good principle—I do not think that the noble Lord argues against the principle—practical? That is what we have attempted to do.
	I shall try to deal with some of the noble Lord's points. He makes a legitimate point when he says that transparency about residence status and the lack of statutory definition makes it difficult to determine status. He is right; it does. However, there will be material to assist. First, the Electoral Commission will produce guidance, which is significant. Secondly, there is existing HMRC guidance, too. Thirdly, someone giving a donation of more than £7,500 who is unsure of their status can seek professional advice, because giving a false declaration is an offence only if it is given recklessly or intentionally. Someone who takes steps to satisfy themselves of their status will not have committed an offence.
	The noble Lord quite understandably also refers to the ECHR. Of course we have considered whether the ECHR is possibly infringed. We think that the statement in relation to these provisions being ECHR compliant stands. This amendment could be said to restrict rights to freedom of expression—which I think is the point that the noble Lord was getting at—or association, but we believe that the difference is that it does so proportionally. Donations of up to £7,500—not £500—can still be paid by non-domiciles. That is a clear protection, as I said in my opening remarks, and is very relevant to the ECHR argument. In short, we are satisfied that these amendments are compatible with the EU and ECHR.
	The noble Lord also made a point about party treasurers. Those of us who have been party treasurers at a very low level in our parties can only have some sympathy for the position in which they sometimes find themselves under the present law. The amendments make it clear that parties will in most cases be able to rely on declarations from the donor in order to satisfy the requirement to take reasonable steps to verify that a donation is permissible. In practice, we expect that this would need to go beyond that only when they have reasonable grounds to think that a declaration is incorrect. Even in that scenario we do not expect party treasurers to have to understand and apply concepts of residence and domicile. We expect, for example, that they could ask the donor for a letter from his or her accountant asserting that the donor is a UK resident and domiciled. We have drafted amendments to ensure that the burden on political volunteers is minimised. I hope the noble Lord thinks that, in principle, that is the right thing to do—to make it easier for volunteers rather than more difficult.
	The noble Lord made a point about previous and current tax years. We have changed the requirements so that the amendments propose requiring a donor to be resident or ordinarily resident and domiciled—ROD, in short—in the year of giving the donation or the loan. The version of the amendments debated in the other place referred to the previous tax year. Why did we make that change? We made it in the light of discussions with Her Majesty's Revenue and Customs and Her Majesty's Treasury. Fundamentally, we believe that it would be bizarre and an unintended effect if an individual who was not ROD but had been last year was a permissible donor whereas someone who was ordinarily resident and domiciled in the current year but had not been so in the year before was not a permissible donor. So we recognise that for some people it will not be clear in-year what their tax status is. If a donor or recipient is in doubt about the permissibility of their donation, they should not give it without independent advice to satisfy themselves of their position.
	He also makes a fair point about the complexity of the tax system. It is certainly an argument that we have employed, and it still exists: the tax system is still complicated in this field. Of course we are not claiming that it is straightforward but—and I go back to something I said a few minutes ago—what we have proposed is a workable and effective means of addressing a clear decision from Parliament, not least from this House on Report. When these matters went back to the other place and were debated through the Government's then amendments, there was of course no Division called at the end of that debate this time last week.
	Finally, on why the anomaly is not a problem now, we took and stand by the view that it is better to tackle these issues in the round. The House decided that this issue ought to be addressed now, not at some time in the future, and we have sought to give effect to that decision. This does not prevent further consideration of the wider issue in due course; indeed, I would be very surprised if there were none.
	Motion agreed.

Parliamentary Standards Bill

Bill Main Page
	Copy of the Bill
	Explanatory Notes
	Amendments

Report

Amendment 1
	 Moved by Baroness Royall of Blaisdon
	1: After Clause 1, insert the following new Clause—
	"House of Lords
	(1) Nothing in this Act shall affect the House of Lords.
	(2) But that is subject to—
	(a) section 13(5),
	(b) paragraphs 5(3) and (4), 16(2), 22(1), 24(2)(b) and 25(1) of Schedule 1, and
	(c) paragraphs 4(2) and 8(1) of Schedule 2."

Baroness Royall of Blaisdon: My Lords, when we debated the question of whether we should say that this Bill applied to your Lordships' House, on the basis of an amendment in the name of the noble Lord, Lord Strathclyde, I said that the Government were happy to accept the principle of the amendment with some exceptions. I undertook to return to the matter on Report. As I explained then, we were unable to accept the amendment as drafted because it was inaccurate in some minor respects. I explained that the Bill gives your Lordships a role in the administration of the new regime. I said, for example, that the chair and members of IPSA, and the commissioner, may be removed from office only following an address by Her Majesty to both Houses of Parliament. The accounts and annual report of IPSA must be laid before each House of Parliament.
	The amendment that I have now tabled gives effect to that undertaking. As well as the two points which I mentioned in Committee, there are a number of other references to your Lordships' House in the Bill. The point on removal of the chair and members of IPSA and the commissioner is covered by the references to paragraphs 5(3) and (4) of Schedule 1 and paragraph 4(2) of Schedule 2. The point on the accounts and annual report of the IPSA having to be laid before each House of Parliament is covered by the references to paragraphs 24(2)(b) and 25(1) of Schedule 1, and paragraph 8(1) of Schedule 2.
	There are three new references to your Lordships' House which also need to be covered. The first two are the references in paragraphs 16(2) and 22 of Schedule 1, which both refer to the expenditure of IPSA being funded by money provided by Parliament. The final amendment refers to the review clause which we inserted into the Bill in Committee. Under that clause, a statutory instrument to continue in existence the provisions of the Bill covered by that clause must be laid before each House of Parliament, and approved by a resolution of each.
	The small exceptions which are now included in this clause do not undermine the basic principle. As I made clear at Second Reading, and again in Committee, the Government entirely accept that this Bill does not apply to your Lordships' House. That is self-evidently the case. We also accept that it should not be extended to your Lordships' House as it is presently constituted. We obviously cannot in legislation put the latter point on the record, but we can put the first point on the record in the Bill and I am happy to do so. I beg to move.

Lord Strathclyde: My Lords, this amendment was tabled to fulfil a commitment that the noble Baroness the Leader of the House made in Committee. My purpose was to make good the words of some government Ministers, notably the noble Baroness, to exclude the House of Lords. On the face of it, I think she has done exactly that. Therefore, I am extremely grateful to the noble Baroness for bringing forward this amendment and I wholly support it.
	Amendment 1 agreed.
	Amendment 2
	 Moved by Lord Jenkin of Roding
	2: After Clause 1, insert the following new Clause—
	"Article IX of the Bill of Rights 1689
	Notwithstanding any provision of the European Communities Act 1972 (c. 68), the European Convention of Human Rights or the Human Rights Act 1998 (c. 42), nothing in this Act shall be construed by any court in the United Kingdom as affecting Article IX of the Bill of Rights 1689."

Lord Jenkin of Roding: My Lords, in discussing the new clause in my name we are also discussing the subsequent new clause. I begin by saying how pleased we are to see the noble and learned Baroness the Attorney-General in her place. We are very grateful that she will be able to give us the benefit of her advice. We have had a long letter from her comparatively recently, but of course it is not on the record. We look forward to hearing what the Attorney-General has to say—no doubt in many cases repeating what is in the letter—because what she says will then be on the record.
	The House will recognise that these two new clauses are exactly the same as those we debated in Committee last Thursday. I have retabled them partly because, in a very important speech, my noble and learned friend Lord Mackay of Clashfern gave his view that European Union law is unlikely to apply to the procedures in the Bill. He added that,
	"one can never be sure".—[Official Report, 16/7/09; col. 1302.]
	Indeed, that is advice that I have had from other sources, and to which I will refer in a moment. My main purpose here is to give the noble and learned Baroness the Attorney-General the opportunity to give the House her authoritative opinion. Even my noble and learned friend Lord Mackay said that this view was "subject to correction" by the Attorney-General. I suspect that there will not be much correction because both noble and learned Lords are extremely knowledgeable.
	The House will be relieved to know that I do not intend to repeat at length what I said in Committee. I know that the noble and learned Baroness has had that drawn to her attention; she deals with it in her letter. Perhaps I can summarise the argument in this way. There are two avenues whereby one might find that Clause 1 of the Bill, as it is now, might be called into question by a European court. I deal first with the question of the European Court of Justice in Luxembourg. Let us suppose that a disgruntled citizen, upset by a proceeding that comes from IPSA, the commissioner or the Committee on Standards and Privileges in the other place, tries to raise the issue by judicial review in court here. That court will then have to decide whether it is covered by Article IX of the Bill of Rights. That, indeed, is something that the court must do. The noble and learned Baroness the Attorney-General made that very clear in a report that she sent to the Leader of the House in another place. I do not think I need to quote it because it is well established.
	Suppose that the UK court then decides that the case falls on the privilege side of the line which divides cases that are within Article IX from those that are not, and therefore declines to hear the case. Suppose that our disgruntled citizen—who must be very disgruntled by this stage—then decides to go to the European Court of Justice in Luxembourg. He cites some provision of EU law—which is obviously an enormously important part of the case if it is going to be established—that might be relevant to his case and asks that court to invoke Article 234 of the treaty. Again, I do not think I need to quote that; it is all in Hansard. Article 234 requires that if such a case comes before the ECJ, that court can ask the UK court to refer the matter to it for review. That seems to me, prima facie, to give jurisdiction to the European Court of Justice to, as it were, "call in" the court.
	When I raised this previously, the noble Baroness, Lady Royall, dealt with it very firmly. I quote her from Hansard of 16 July at col. 1304. She said:
	"A UK court must refer questions of the interpretation of EU law to the ECJ when it considers it necessary, but this is entirely distinct from questions relating to Article IX of the Bill of Rights".
	She continued:
	"The wider question of whether the Bill of Rights prevents any international court looking at proceedings in Parliament is a separate issue".—[Official Report, 16/7/09; col. 1304.]
	I am not quite sure what the basis is for saying that the issue is entirely distinct from Article IX. When she said that it was a separate issue, she was, I think, referring to the second avenue, which could be the European Court of Human Rights.
	I return for a moment to the hypothetical case which I postulated. The applicability of the Bill of Rights has to be right at the centre of the issue before the national court, and so must be relevant to the case before European Court of Justice. If there is an issue of EU law—and I entirely accept that that is a precondition for this process to be applied—it seems that in those circumstances the European Court of Justice would have to apply itself to an issue relating to Article IX of the Bill of Rights.
	This of course follows the acceptance by the Government of what is now Clause 1, which makes it absolutely clear that nothing in the Bill affects the Bill of Rights—but that applies only to UK courts, because it is essential to protect the freedom of speech in Parliament from interference by the courts. However, this issue that might, in certain circumstances, be called before the European Court of Justice.
	With the greatest respect to the Leader of the House—I do respect her; she has handled the Bill with great skill and has made many concessions to the views expressed in all parts of the House—I do not think that she really answered that question. Although my noble and learned friend Lord Mackay thought that such a case could not come before the European Court of Justice, and that, as he put it, it was,
	"unlikely to apply to these procedures",
	he added,
	"although one can never be sure".—[Official Report, 16/7/09; col. 1302.]
	I received exactly the same advice from another legal source who I consulted between then and now. That source states, in almost exactly the same words:
	"It seems rather unlikely that the IPSA Bill"—
	I think that he is referring to the Bill—
	"would be an instance of the UK implementing union law. But again, one cannot offer a guarantee as to future judicial interpretation by the EC".
	Although such circumstances may be unlikely, the evidence that I have been given so far suggests that they are unlikely but not impossible.
	Since then we have received the long letter from the noble and learned Baroness the Attorney-General, who made a definite statement, which she will, no doubt, wish to repeat in her reply to this debate. I very much look forward to her speech. However, we must ask her to assure the House that there is no possibility of such an issue arising under this Bill or under any of the procedures in it. If there is doubt, we would be wise to have the protection offered by the new clauses which I have tabled.
	When we consider the European Court of Human Rights—I have taken further advice on this—we are faced with different issues. First, the court does not have a power to call in, as it were, the case from the domestic court. It is the litigant who takes his case to the ECHR. There is no obligation—there is nothing parallel to Article 234—under that procedure. However, we find there that the ECHR can consider all the merits of the case. If an issue is raised involving Article IX of the Bill of Rights, the court will consider it.
	I will enlarge on that for a moment. The House will be aware that the ECHR is a convention that imposes general human rights standards, irrespective of their subject. Article 6 of the ECHR is likely to be the issue. It prescribes procedural guarantees for fairness in the determination of any criminal charge or any "civil rights and obligations". My adviser says that it is conceivable that an Article IX point would arise in such ECHR proceedings. As these concern the international obligations of the UK—that is to say, of the executive, judicial and legislative branches of the state—we could not simply assert our own constitutional arrangements as a conclusive answer. That is the advice that I have been given.
	However, we could expect to be given,
	"a wide margin of appreciation".
	I am not sure that I understand what that means. It was applied in a very interesting case. I assure noble Lords that I do not intend to read all 77 pages of the judgment. The case of A v The United Kingdom came before the ECHR. I will simply say that it was the "neighbours from hell" case that some noble Lords may remember. The neighbours, having been named in another place, took the case to the European Court of Human Rights. What resulted was detailed consideration—page after page of the majority judgment—arguing whether the Article IX provision in the Bill of Rights overrode the right of the applicant, namely the neighbour who had complained, to have what they regarded as justice.
	There was a dissenting judgment. The dissenting judge said that Article IX did not override the other conditions. However, the majority of judges in the court found that, on balance, it did. The court considered that the parliamentary immunity enjoyed by the Member of Parliament in the case pursued the legitimate aims that we all support of protecting free speech in Parliament and maintaining the separation of power between the legislature and the judiciary. The judges used this phrase when they ruled that,
	"the application of a rule of absolute Parliamentary immunity cannot be said to exceed the margin of appreciation allowed to States in limiting an individual's right of access to court".
	I would be most grateful if the noble and learned Baroness, in her reply, could explain what is meant by "margin of appreciation".
	I hope that I have established to the satisfaction of the House that it is within the competence of the ECHR to examine whether Article IX applies to a case before it. In the case that I have quoted—I will not read it out to noble Lords, as that would try their patience—there is at least doubt as to whether matters under the Bill could come for judicial review. This would not be by our own courts—Clause 1 removes that possibility—but by the European Court of Human Rights. That is the case that I made in Committee, and the case that I make now. My noble and learned friend Lord Mackay said that he was not sure and that an outcome could not be guaranteed. If there is any doubt left in our minds, the two new clauses that aim to put the matter beyond doubt should be added to the Bill. I beg to move.

Baroness Scotland of Asthal: My Lords, with the leave of the House, it has been suggested that I should rise at this stage to respond to the comments of the noble Lord, Lord Jenkin. I shall then give the House an opportunity to debate the issues more fully and, if necessary, your Lordships can be wearied by me again in response.
	I am very grateful to have this opportunity to respond to the request made in Committee that I should attend today. The noble Lord, Lord Jenkin, among other noble Lords opposite, asked in particular that I provide an assurance that the constitutional relationship between Parliament and the courts will not be adversely affected by the Bill. My views have also been sought on the criminal offence in Clause 8(1), the need for and effect of which have both been rigorously probed by eminent lawyers in this House during debate.
	In response to that invitation and with the House's agreement, I shall take a little time so that I can read into the record the matters that I have already referred to in my letter. I was not able to attend earlier proceedings on the Bill and therefore I assure the House that I have carefully read the Official Report. As ever, I was greatly impressed by the care and concern that this House has shown in examining the Bill and subjecting it to the closest and most intelligent scrutiny. I hope to be able to provide your Lordships with the assurance that they seek.
	Today, as the noble Lord indicated, I have written to all those who took part in the debate on the Bill and have made copies of that letter available in the Printed Paper Office. I apologise to anyone who has not yet had sight of it but I assure the House that it was done as speedily as humanly possible. I do not intend to repeat the contents of the letter now but I shall, with your Lordships' indulgence, explain as briefly as I can why I believe that the proper concerns that have been raised can be answered.
	The Bill has been amended substantially during its progress through the other place and the proceedings so far in this House. I shall not enumerate here all the changes that have been made but I think I may fairly say that the version that remains is less ambitious in its aims. Serious concerns were raised that the Bill, which might affect freedom of speech in Parliament and the relationship between Parliament and the courts, could not properly be considered in the time available before the Summer Recess. It is, however, genuinely urgent that the payment of expenses and allowances and the rules relating to financial interests for Members of the other place are put on a transparent and independent statutory footing.
	I assure the House that the Bill does not now affect the privileges of this House or the other place, or the operation of Article IX of the Bill of Rights 1689; nor does it enable the courts to question proceedings in Parliament. The Independent Parliamentary Standards Authority will be charged with establishing a new scheme for allowances and for drawing up a code of financial conduct, which will govern the rules relating to the registration of financial interests and paid advocacy. It will be responsible for paying salaries and allowances and for maintaining the register of interests. It will also determine the procedures for investigations by the independent Commissioner for Parliamentary Investigations, who will be charged with investigating alleged breaches of the allowance scheme and failures to register financial interests. However, the authority will have no role in enforcing the scheme or the code or in investigating the actions of individual MPs. It will, as a statutory rule-making body, potentially be subject to judicial review, just as Ministers are subject to the court's jurisdiction when making rules. There is, in my respectful submission, nothing to fear from that.
	Were the Independent Parliamentary Standards Authority to make rules that were irrational or that failed to take account of relevant matters, it is right that it should potentially be subject to review by the Administrative Court. The new statutory Commissioner for Parliamentary Investigations, established under the Bill, will be able to investigate alleged breaches of the allowances scheme or of the code of financial conduct as far as they relate to the registration of interests and within the framework set up by IPSA. He or she will be empowered to agree the terms on which the overpayments of allowances and minor or inadvertent breaches of the registration rules can be settled. In more serious cases, findings may be referred to the House of Commons Committee on Standards and Privileges. The new commissioner will have no jurisdiction to investigate allegations of paid advocacy or failures to declare interests in debate, which will remain, as now, matters for the House.
	Like the authority, the new commissioner is likely to be regarded by the courts as a statutory body, subject to the normal principles of administrative law and judicial review. I suggest that there is nothing for Parliament to fear from that either. The Independent Parliamentary Standards Authority and the commissioner are deliberately being set up as bodies independent of Parliament. Although their functions are of great concern to parliamentarians, payments of allowances and registration of financial interests are not matters of privilege and do not entail questioning of proceedings in Parliament. Any decisions on sanctions to be imposed on individual Members of Parliament will, as now, be for the Committee on Standards and Privileges. That committee is a committee of the House of Commons set up under the rules of the House and answerable to the House. The Bill does not affect in any way the committee's status; its proceedings are recognised as proceedings in Parliament and, therefore, are immune to questioning in the courts by virtue of Article IX of the Bill of Rights 1689. If further assurance is needed, that fact is underlined by what is now Clause 1 of the Bill. I do not think that the Bill has implications for the relationship between Parliament and the European Court of Justice or the European Court of Human Rights.

Lord Campbell-Savours: My Lords, I am sorry to intervene at this stage but perhaps I can take my noble and learned friend back to what she said about the commissioner not having a role in carrying out investigations into paid advocacy. If a Member has not registered an interest but perhaps is caught on the issue of paid advocacy, does that mean that in a complaint which spans both registration and paid advocacy the commissioner outside privilege—the commissioner appointed under the Bill—will consider the issue of registration and the other commissioner, inside privilege—the commissioner for the Committee on Standards and Privileges—will deal with the issue of paid advocacy? In other words, two different commissioners may well end up dealing with exactly the same case. Perhaps we need some assurances on this. If there are to be two commissioners operating on that basis, perhaps we should appoint one and give him two caps: one as commissioner for the Committee on Standards and Privileges and a second as commissioner for IPSA, working outside the House.

Baroness Scotland of Asthal: My Lords, of course, we might have to look at that in the future. We need to be very clear that IPSA will set the rules on paid advocacy under Clause 5 but that the commissioner's functions under Clause 6 are limited to the allowances scheme and breaches of registration of interests. Investigations of alleged breaches of the paid advocacy rules will continue to be a matter for the current standards commissioner who will report to the Committee on Standards and Privileges. I believe we have clarity there. Of course, some issues will have to be looked at later on but there is not a lack of understanding about how the two will interact one with the other. We are in a fairly robust position going forward.
	I was dealing with the situation in relation to the European Court of Justice. I hope I made it clear that I do not think that the Bill has implications for the relationship between Parliament and the European Court of Justice or the European Court of Human Rights. I see nothing in it that raises issues of European Community law that might therefore be justiciable in the ECJ.
	In so far as issues arise under the European Convention on Human Rights, if, as the Joint Committee on Human Rights argues, the current procedure of both Houses is incompatible with the convention, it would be open to a Member affected to challenge them in Strasbourg. The Government respectfully disagree with the committee that the current position is in breach of MPs' convention rights. We think that the better view of convention jurisprudence is that Parliament is entitled to have its own internal disciplinary system. In any event, the Bill does not affect the existing procedure, except to add a degree of independence and further safeguards to the investigation process before findings are referred to the committee.
	I think it might be convenient if I deal with the particular concern raised by the noble Lord, Lord Jenkin, in relation to those two courts. The position is different depending on whether we are talking about the European Court of Justice or the European Court of Human Rights. This was explored quite extensively in Committee. The European Court of Justice interprets matters of EU law. Article 234 provides that the European Court of Justice has jurisdiction to give preliminary rulings on matters of EU law, and a domestic court may refer such matters to it when it considers that a decision on the question of law is necessary to enable it to give judgment. I think noble Lords were concerned about circumstances that might arise where someone aggrieved as a result of the Bill could have a matter referred from the domestic courts to the European Court of Justice.
	However, let me make it clear that this is not something about which the Government consider there is any real concern. The subject matter of the Bill relates to the allowances and financial interests of Members of the House of Commons. In the Government's view, it is very unlikely that anything in the Bill would give rise to subject matter that could be interpreted by the European Court of Justice. I note that this accords with the view that the noble and learned Lord, Lord Mackay of Clashfern, expressed in Committee. In Committee, the noble Lord, Lord Jenkin, made particular reference to the European Charter of Fundamental Rights. Incorporation of the charter would not alter the position as I have outlined it because it does not extend the scope of EU law.
	I now turn to the position concerning the European Court of Human Rights in Strasbourg. The Government cannot rule out the possibility of matters concerning conduct and discipline in Parliament making their way to the Strasbourg court. I hope I made that clear in my letter. As long ago as 1999, the Joint Committee on Parliamentary Privilege noted that, although proceedings in Parliament are explicitly excluded from the Human Rights Act, that does not affect the position of the Strasbourg courts. However, this is a product of the fact that the European Convention on Human Rights and the Strasbourg court are dealt with by treaty at international law. Unlike the position concerning EU law, matters are not referred by domestic courts to the Strasbourg court. Rather, an individual makes an application directly to that court. Neither the Bill of Rights 1689 nor any amendment to this Bill could alter that position at international law. However, it is essential that the House notes that this can arise at present. It would be possible for a Member of the other place who feels aggrieved by the current conduct and discipline system there to take the matter to the Strasbourg court. In the Government's view, the provisions in the Bill would only reduce the risk of such occurrences because, for the first time, MPs who have concerns about matters that lie within the jurisdiction of the Commissioner for Parliamentary Investigations will be investigated by an officeholder who is entirely independent of government and Parliament.
	A further point to note is that noble Lords should find some comfort from the fact that the Strasbourg court, while not bound by Article IX of the Bill of Rights 1689, has shown that doctrine the utmost respect in the past; I refer to the case—the noble Lord has already mentioned it—of A v the United Kingdom, which the Strasbourg court decided in 2003. To give the noble Lord greater comfort, I should say that the majority was six to one. Most people would say that that was a win. The applicant in that case complained that parliamentary privilege infringed her right to access to a court, guaranteed under Article 6 of the convention, by preventing her from being able to sue a Member of the other place in defamation.
	The Member had made the statements that were alleged to be defamatory in Parliament and was thus, at least as far as the domestic courts were concerned, protected by privilege. Even though not bound by Article IX of the Bill of Rights, the Strasbourg court found that there had been no infringement of the convention. This is because the Strasbourg court held that parliamentary privilege pursued the legitimate aim of ensuring that freedom of speech in Parliament was protected and to maintain the separation of powers between the legislature and the judiciary.
	The restriction was proportionate because, among other things, it protected only statements made in proceedings in Parliament and the applicant had other means of redress—for example, through the House of Commons Committee on Standards and Privileges. Although the case was not decided in the context of conduct and discipline functions of Parliament, it demonstrates the great respect that the Strasbourg court has previously shown to the UK doctrine of parliamentary privilege, and is an exemplar of what the margin of appreciation delivers. We expect the Strasbourg court to continue to show such respect in the future.
	I hope that that explanation will reassure the noble Lord that there is nothing to worry about in that regard.

Lord Tyler: My Lords, I am very grateful to the Attorney-General. Does she acknowledge that if the Government had followed the recommendation of the Joint Committee on Parliamentary Privilege, which reported 10 years ago, her very comprehensive—indeed, painstaking—explanation of this situation would not be necessary? We are very grateful to her, but is it not a pity that the Government did not follow the Joint Committee's recommendation 10 years ago?

Baroness Scotland of Asthal: My Lords, the Government have taken on board the concerns that were raised 10 years ago, but your Lordships will remember that the recommendations were not all universally welcomed. Some of them have proved not to be entirely correct, so perhaps this is not the moment to bandy about beliefs about who was right and who was wrong. I simply ask noble Lords to accept that we have all learnt a lot through the passage of time.

Lord Barnett: My Lords, I am a non-lawyer and I, too, read my noble and learned friend's 10-page letter, which I thought I understood. If she is saying in effect that the amendments tabled by the noble Lord, Lord Jenkin, are unnecessary, a more important question is: if they were on the statute book, would they do any harm?

Baroness Scotland of Asthal: My Lords, we should have only that on the statute book which is necessary. I say that most particularly because I received a very strong stricture from the Lord Chief Justice, who bewailed the fact that we put anything unnecessary on the statute book and enjoined us to resist the temptation fearfully. Having had that stricture once, I will need only to contemplate it to refrain from the seductive lures that my noble friend gives me on this occasion. In so far, therefore—

Lord Lester of Herne Hill: My Lords, I was not going to interrupt, but is not the answer that it would do harm because it would be inconsistent with our obligations under the convention and would contradict the excellent European Communities Act introduced by the noble and learned Lord, Lord Howe of Aberavon?

Baroness Scotland of Asthal: My Lords, the noble Lord is probably right, but in order to explain why that is so we would be here for probably another three or four hours, so I shall resist that blandishment too and say that the Bill as currently structured is at last perfectly formed. In so far as issues arise under the European Convention on Human Rights, as the Joint Committee on Human Rights argues, if the current procedures of both Houses are incompatible with the convention, it would be open to a Member to pursue that, as I have described. I hope that I have gone some way towards reassuring the House and assuaging the concerns about the constitutional nature of this Bill.
	I shall now pray the indulgence of the House once again to speak to the concerns expressed about the criminal offence in Clause 8(1). I will not comment on the offences that have, as it were, fallen by the wayside in your Lordships' House except to say that they were certainly in my view legally defensible. However, as they are now of academic interest, at least for the time being, I shall not seek to defend them today. The elements of the offence in Clause 8(1) are making a statement in support of a claim under the MPs' allowances scheme knowing it to be false or misleading in a material particular. The maximum penalty is 12 months' imprisonment. It may be tried summarily or on indictment. Offences consisting of knowingly making false statements exist in many contexts where Parliament agrees that there is a need for complete frankness. Examples include applications for passports, driving licences and social security benefits, and statements to company auditors and financial regulators. The Government believe that, in order to restore trust in the integrity of MPs and the system under which they receive public money, it is necessary to make it explicit that MPs, too, should be under a duty of candour.
	There is nothing wrong in principle about an offence that applies only to Members of the House of Commons. The other offences, formerly to be found in Clause 8, were paralleled by offences in the Scotland Act and the Government of Wales Act, which were created by this Parliament. They apply only to Members of the Scottish Parliament and the National Assembly for Wales respectively.
	As my noble friend the Leader of the House explained in Committee, the new offence is not the same as the more serious offences in Section 2 of the Fraud Act 2006 or Section 17 of the Theft Act 1968. Both those offences require proof of dishonesty and of the purpose of making a financial gain, with maximum sentences of 10 and seven years respectively. As noble Lords know, the Fraud Act was the result of a Law Commission report that recommended that proof of dishonesty should be required in addition to the other elements of the offence that it created as the essence of a serious offence of deception.
	I am sure that noble Lords will understand that it would not be appropriate for me to give specific examples of behaviour that might be caught by the new offence but not by the existing more serious offences. In general terms, it may be that dishonesty or an intention to make a financial gain will not be established if a claimant believed that they had an entitlement to the sum claimed; or that the person from whom it was claimed consented to pay it; or that the money would be set off against another entitlement; or that there was an intention to repay it. Proof of all the elements of the offence, including dishonesty and intent to make a financial gain by the false statement, is for the prosecution to establish beyond reasonable doubt.
	There is a clear analogy with offences in relation to social security benefits. The summary offence in Section 112 of the Social Security Administration Act 1992 requires proof only that a false representation was knowingly made in a claim for benefits, and the maximum penalty is three months' imprisonment. That Act also contains in Section 111A(1) the more serious offence of dishonestly making a false representation for the purpose of obtaining a benefit payment; that offence carries a maximum penalty of seven years' imprisonment. The case law referred to in my letter illustrates that the requirements to prove dishonesty and the purpose for which a false statement is made do indeed make a difference in real cases.
	I turn now to the concern raised by the noble and learned Lord, Lord Mackay of Clashfern, that if there were a lesser offence relating to MPs, prosecutors might be inhibited from charging the more serious offence even when the circumstances warranted it. It must be absolutely right that Members of Parliament are subject to the ordinary criminal law and it is no part of the Government's intention to give preferential treatment to MPs or to create a carve-out from the offence in Section 2 of the Fraud Act for Members of Parliament. Selection of the appropriate offence within a hierarchy of potential charges is an important part of the prosecutor's role. The guidance to the Crown Prosecution Service issued by the Director of Public Prosecutions makes it clear that the selection of charges must reflect the seriousness and extent of the offending, giving the court adequate powers to sentence and enable the case to be presented in a clear and simple way. In addition, the guidance on Section 2 of the Fraud Act already alerts prosecutors to other offences that may be considered, including false accounting and various false statement offences.
	The new offence criminalises conduct that on its own is not currently an offence. If there is evidence of dishonesty and an intention to make a gain, the prosecuting authorities will, as now, have the option of prosecuting for the more serious offences of fraud or false accounting, just as those responsible for ensuring the integrity of the social security system have the option of prosecuting for the more serious offence in Section 111A of the 1992 Act where dishonesty can be established. There are no grounds for saying that this Bill gives Members of Parliament preferential treatment by comparison with their constituents. On the contrary, for the first time it places them under a similar obligation to tell the truth in claims and creates a sanction should they fail to do so. A number of us listened carefully to the words of the public when it was said, "If I had made this claim on a benefit form, I would have been prosecuted". It puts MPs in a similar position when making a declaration; if they do so within the meaning of this offence, they, too, will be subject to similar rigour.
	I hope that I made it clear in my letter this morning and in what I have said in response to the amendment—I know that my noble friend the Leader of the House has made it clear—that it is not the Government's intention, in bringing forward the offence in Clause 8(1), to see Members of Parliament in the criminal courts. Rather, it is to make it as plain as it can be that the duties of honesty and integrity that underpin the codes of conduct of both Houses are not empty words. They entail a positive duty of probity and candour. Members of Parliament should be in no doubt whatever that, once the new allowances scheme is put in place by the Independent Parliamentary Standards Authority under the terms of this Bill, they must not include in any claim under it information that they know to be false or misleading. The Bill neither is unfair to Members of Parliament nor does it give preferential treatment as compared with members of the public.
	I hope that I have been able to provide at least a measure of reassurance to those who have expressed concerns about the Bill. I believe it to be a necessary part of re-establishing public trust in their elected representatives. I do not believe that it intrudes in any way into the privileges of this House or the other place, or that it affects the delicate balance in our constitution between Parliament and the courts. On that basis, I commend it to your Lordships, in the hope that I have left no stone unturned and that therefore the debate can now conclude.

Lord Higgins: My Lords, when I first suggested in discussions ahead of the Committee stage last week that it would be helpful to have the advice of the Attorney-General, the Leader of the House kindly agreed to consider it. I should stress that the suggestion in no way reflects on the Leader of the House, who has shown the most extraordinary grasp of the Bill and has been eloquent in expressing her views on it. None the less, I think that it was a good suggestion and I am glad that it was accepted. It has been extremely helpful to have the views of the Attorney-General. In addition to what she has said this afternoon, she has, as the noble Lord, Lord Barnett, pointed out, written a letter of some 10 pages in length. I have to say that in some ways I found the letter easier to understand than the speech. I am not sure to what extent the status of the letter means that it can be included from a Pepper and Hart point of view—perhaps by way of a Written Answer or something of that kind.
	I do not want to delay the Committee for long. The letter reassures one to a considerable extent. However, it is wise that we should have the safety net of the amendment that was accepted last week with regard to the Bill of Rights in this Bill even though, if I understand it correctly—the Attorney-General will tell me if I am wrong—she does not think it likely to be used. I will not say that it is unnecessary because I do not think that it is, but it is unlikely to be used. The only point that I have on that is that I now realise that the amendment is not, strangely enough, in line with the Bill of Rights, which refers to "any court", whereas the amendment as it has been included in the Bill refers to "any court in the United Kingdom". I am beginning to wonder whether we ought to take out the phrase "in the United Kingdom" at Third Reading to avoid any doubt about the international position. No doubt we can think about it.
	I thank the noble and learned Baroness for her remarks, which are reassuring. It is quite extraordinary that the Bill ever saw the light of day in its original form given the fantastic way in which it has been hacked about since then. However, we have made a good job of hacking it about and we can be reassured that we have done as much as we can about the concerns expressed with regard both to privilege and to the relationship between the courts and Parliament.

Lord Lester of Herne Hill: My Lords, there is just one stone that I should like to turn, because I respectfully agree with all that the Attorney-General has said. The point arises later in amendments about fairness and rights of appeal. Does the noble and learned Baroness agree that, if the House of Commons were to change its standing orders and procedures in such a way as to include fairness and some sort of right of appeal, this would make it even less likely that a case could succeed in Strasbourg under Article 6 of the convention because the House of Commons itself would have put its own procedures in order? If that is the case, it will obviously make it much easier to deal with those amendments later.

Lord Pannick: My Lords, perhaps I may add one footnote to the powerful and helpful observations of the Attorney-General, with which I agree, relating to judicial review. There are many cases where courts have declined to entertain applications for judicial review where the body concerned, even though it is a statutory body, is performing an advisory function and the effective decision is made by another person. The court takes the position that the complainant should exhaust the procedure before the body which decides the matter rather than litigating with the advisory body.
	This is important because many—not all—of the functions which we are conferring on IPSA and the commissioner are advisory, not deciding, functions; they are reporting, effectively, to the other place. Were a judicial review application to be brought in relation to the performance of such a function, I would expect that the courts would be likely to decline to entertain the application. They would do so not merely because IPSA and the commissioner are advisory bodies in that respect, but also because their function is preliminary to the performance of a parliamentary function by the other place. Were they to read these proceedings, I would not want any future court to proceed on the basis that it was accepted in this House that applications for judicial review against IPSA and the commissioner would and should be entertained by the High Court in all circumstances.

Lord Mackay of Clashfern: My Lords, I respectfully agree with the noble Lord, Lord Pannick. I am sure that none of us would wish to encourage the thought that these proceedings, which are outside Parliament but are preliminary to proceedings in Parliament, should be the subject of judicial review. The jurisdiction is there in all probability but I would hope that the courts would find it unnecessary to exercise it. I think I am right in saying—I am going very much on my memory—that there is a medical case in the books in which the House of Lords thought that judicial review was possible even though there was an ultimate appeal to the courts. But that does not detract from the point that has been made.
	I thank the Attorney-General for her excellent letter and for the concise but authoritative statement she has made today. If it commends itself to the House of Commons, it would be desirable for it to adopt procedures which are in accordance with the Strasbourg and our own common law rules of fairness. But that is a matter for the House of Commons and should not form part of the Bill.

Lord Elystan-Morgan: My Lords, I, too, congratulate the Attorney-General on her clear and concise exposition of her case. Perhaps I may make a brief point on Clause 8(1)(a) in relation to a false claim. I shall try to illustrate how narrow the difference is between the Government's case and the case of those of us who have spoken at some length and with great force against that measure. It is perfectly clear that, in so far as the vast majority of cases which come under Clause 8(1)(a) are concerned—as was illustrated so trenchantly by the noble and learned Lord, Lord Mackay of Clashfern, last week—the vast majority will inevitably involve dishonesty. It is impossible to conceive of a situation where a person deliberately makes a representation knowing it to be false or misleading without it being dishonest.
	However, when the Leader of the House was asked last week about illustrations, she helpfully described two situations where it might be difficult to prove dishonesty as defined under the authority of R v Ghosh some 25 years ago, a case which has been regarded as the classic enunciation of that interpretation. The noble Baroness said that there could be a situation where a person rents flat 22A but then, for one reason or another, moves to flat 24A in circumstances that are identical. The claim that would be made would be incorrect—it would be false—but it would be for exactly the same amount of money as would be deserved by that claimant in any event. The other illustration would be perhaps more difficult to deal with. It envisages a situation where a Member of Parliament had gone along to one of the servants of the House and had been assured that it was perfectly proper, moral and legal in every way for a claim to be made, only to find out later that that was not the case. Those two instances illustrate the difference between offences under the Fraud Act 2006 and the Theft Act 1968 and the offence now under Clause 8(1)(a) and (b).
	However, the point I make is this: in those instances, would anyone in his senses wish to prosecute a Member who had been told in terms by a servant of the House that what he was doing was entirely proper; or where the person did not want to fill in a whole barrage of forms to change his application from 22A to 24A? Indeed, there may be some other reason—he may have formed a relationship with someone and did not want to publicise the fact that he had gone to a different flat—but would anyone in his senses prosecute in those circumstances? If the answer to my rhetorical question is no, what is the point of breaching the fundamental rule of privilege that the jurisdictions of the High Court to Parliament and the jurisdictions of the other courts are mutually exclusive? It is not worth it.

Baroness Scotland of Asthal: My Lords, I thank all noble Lords who have agreed with the analysis and for the kind remarks that have been made about it. I can reassure the noble Lord, Lord Elystan-Morgan, about the difference between these two offences. We have to take into account that if, pursuant to Section 112 of the Social Security Administration Act 1992, an ordinary member of the public made a false declaration similar to that which we now contemplate, they would be successfully prosecuted. We are trying to draw a line under the poor practice that has gone before and be very clear that all Members of Parliament have to act with the utmost probity when filling in these issues. We would hope that no Member of Parliament would seek to deliberately fill out these forms incorrectly in a false or misleading way. So whatever has gone on in the past will be left in the past, but from now on there will be this clear standard.
	We do not think that it will cause undue difficulty. The aspiration of the whole House and the other place is to have rules that are clear and precise and easy to follow, and not depend on conversations about what may be in and may be out. A lot of pain and difficulty has been caused because there was not clarity: what one person thought was in, another person thought was out; one person may have been given an assurance, another person was not. We hope that that will now be concluded. We will have new rules, clearly understood and promulgated, that will enable all to know precisely where they stand and therefore to answer frankly.
	I say to the noble Lords, Lord Pannick and Lord Lester, and the noble and learned Lord, Lord Mackay of Clashfern, that I agree with them. I would particularly like to adopt in their entirety the comments made by the noble Lord, Lord Pannick. I would not wish the courts to misunderstand the acceptance that I make that there is a technical ability to judicially review, because they can do so only within the context and confines that currently exist for that principle. I respectfully agree with the noble Lord's analysis that, in the circumstances that he describes, the court, acting properly, would be likely to resist the temptation to review. Nothing that I say should be misinterpreted. We therefore have, in this debate, a happy Pepper v Hart exposition.
	With regard to the comments from the noble Lord, Lord Lester, and the noble and learned Lord, Lord Mackay of Clashfern, about fairness, I respectfully say that there is a great deal of merit in the suggestions that they make. I am confident that this matter is likely to be addressed, if not in this debate then later.

Lord Jenkin of Roding: My Lords, I am grateful to all noble Lords who took part in this debate. I think that the circumstances will show that I was justified in putting these clauses down again in order to enable us to have what I can describe only as the immensely authoritative statement from the noble and learned Baroness the Attorney-General, coupled with her letter. I have some sympathy with those who suggested that it is easier to read the letter than to follow the somewhat complicated argument that the noble and learned Baroness delivered in the House, but we will have both. She has been reading into the record in the shape of Hansard, while her letter contains some additional explanations.
	I shall not go into the whole question of criminal liability under Clause 8. That has been addressed by others, and we have had an interesting and authoritative answer. On the question of the European legislation, though, it is now recognised that yes, the European Court of Human Rights can call into question what is said in Parliament, as was emphasised by the case that I cited and which the noble and learned Baroness also referred to, A v United Kingdom. There is recognition that there are circumstances in which Members of either House can find their remarks being quoted in a court. On whether my noble friend Lord Higgins is right that taking out the words "in the United Kingdom" would make a difference, I would need to take legal advice; neither he nor I are lawyers, and I would hesitate to express an opinion.
	The noble and learned Baroness has gone a long way to satisfying me that the risks of there being a major challenge to Article IX of the Bill of Rights 1689 are extremely small. Although one might have some doubts about her assertion that the Bill is now "perfectly formed"—I have a suspicion that she may come to regret those words—she has gone a long way to satisfying me on the merits of this particular case. I beg leave to withdraw the amendment.
	Amendment 2 withdrawn.
	Amendment 3 not moved.
	Clause 2 : Independent Parliamentary Standards Authority etc
	Amendment 4
	 Moved by Lord Shutt of Greetland
	4: Clause 2, page 2, line 2, at end insert "("the Committee")"
	Amendment 4 agreed.
	Schedule 1 : Independent Parliamentary Standards Authority
	Amendment 5
	 Moved by Baroness Royall of Blaisdon
	5: Page 6, line 21, leave out from "means" to end of line 22 and insert "-
	(a) a function that is exercisable-
	(i) by the Director by virtue of this section, or
	(ii) by customs revenue officials by virtue of section 11,
	(b) a function that is conferred on customs revenue officials or the Director by or by virtue of any of sections 22 to 24 (investigations and detention), or
	(c) a function under Community law that is exercisable by the Director or customs revenue officials in relation to a customs revenue matter."
	Amendment 5 agreed.
	Amendment 6
	 Moved by Lord Jenkin of Roding
	6: Schedule 1, page 15, line 34, leave out "consistency" and insert "the consistency specified under sub-paragraph (3)"

Lord Jenkin of Roding: My Lords, we had a brief discussion in Committee about the meaning of the word "consistency" in the subsection concerned. The noble Lord, Lord Borrie, suggested that it obviously referred back to the previous clause, and the noble Lord, Lord Bach, agreed with that. I suggested that if the word "such" were inserted, that would make it clear. That did not find favour, as was indicated in the letter that we had from the noble Baroness the Leader of the House. I therefore suggested the words in this amendment instead. This is a matter of legal interpretation; there is no real substance in the thing other than where it makes the issue clearer to the reader. As the Bill originally stood, the word "consistency" at the end of the subsection seemed to give rise to some confusion. I beg to move.

Lord Bach: My Lords, I would like to make our debate on this amendment last, but I cannot. We agree with the noble Lord and thank him. We are going to vote with him on this amendment.

Lord Jenkin of Roding: My Lords, I am immensely grateful to the Government and rather overwhelmed.
	Amendment 6 agreed.
	Clause 4 : MPs' allowances scheme
	Amendment 7
	 Moved by Lord Hunt of Kings Heath
	7: Clause 4, page 3, line 3, at end insert—
	"(1) In section 3A(1) of the European Parliament (Pay and Pensions) Act 1979 (c. 50) (power to make order aligning MEPs' resettlement grants with MPs' resettlement grants), after "resolutions of the House of Commons" insert ", or a scheme under section 4 of the Parliamentary Standards Act 2009,"."

Lord Hunt of Kings Heath: My Lords, this is a technical amendment. Under the European Parliament (Pay and Pensions) Act 1979, there is a power for the Leader of the House of Commons to make an order aligning MEPs' resettlement grants with MPs' resettlement grants. At the moment, the power can be exercised only to align MEPs' grants with resettlement grants set by resolution of the House of Commons. In future, however, resettlement grants will be set as part of the allowance scheme that is drawn up by IPSA. It is a key part of the scheme for improving the independence and transparency of the allowances scheme that it should not be subject to approval by resolution of the House. Without this amendment, therefore, there would be no means in future of aligning MEPs' resettlement arrangements with those for MPs.
	I should add for clarification that, from 14 July 2009, the 1979 Act applies only to those who were MEPs before that date and who opt out of the new system for payment of MEPs by the European Parliament. I beg to move.
	Amendment 7 agreed.
	Amendment 8
	 Moved by Lord Hunt of Kings Heath
	8: After Clause 5, insert the following new Clause—
	"Information and guidance about taxation
	(1) The IPSA must provide to members of the House of Commons—
	(a) details of any general information or guidance about taxation issues published by HMRC that it considers they should be aware of, and
	(b) any other general information or guidance about taxation issues that it considers appropriate (consulting HMRC for this purpose as it considers appropriate).
	(2) "Taxation issues" means—
	(a) issues about the taxation of salaries payable under section 3 and allowances payable under the MPs' allowances scheme, and
	(b) any other issues about taxation arising in connection with those salaries and allowances.
	(3) "HMRC" means Her Majesty's Revenue and Customs."

Lord Hunt of Kings Heath: My Lords, this amendment deals with an issue which arose in Committee in the other place. It was felt in debate there that, given that some of the public concern about the issue of allowances and expenses arose from the tax treatment that had sometimes been applied, there was a case for making clear what IPSA's responsibilities with regard to taxation matters were.
	A new clause, proposed by Mr Durkan in another place, would have laid certain obligations on IPSA in relation to both individual tax deductions and general guidance. In that debate, the Government clearly understood that rules in relation to taxation concerning the tax treatment of second homes and questions about whether accountants' expenses were tax-deductible had formed part of the public concern about the revelations about the expenses regime in the other place. However, the Government had concerns about the drafting of Mr Durkan's proposed new clause.
	It either set out matters of general practice which would apply to any person who was making payments that would be taxable, such as salaries, or it appeared to suggest that, in certain circumstances, the IPSA might be obliged to give individuals tax advice. In particular, the clause proposed by Mr Durkan said that the IPSA should give individuals advice on relevant principles and considerations of due parliamentary standards. As was pointed out during the debates in the other place, it is the individual's obligation to determine his or her tax liability and, if necessary, to seek professional advice so to do. It would not be, and should not be, an excuse for making the wrong tax payments that the IPSA had given advice on the matter. HMRC already provides general advice and guidance. Legislating for that would be unnecessary and potentially have unforeseen consequences.
	However, although the Government were concerned at the wording of Mr Durkan's proposed new clause, they accepted the general principle of what he was aiming at. The draft clause which I have now tabled sets out the general obligation on the IPSA to provide to Members of the House of Commons any general information or guidance about taxation issues published by HMRC. The key point of this is that the obligation is to make available guidance which HMRC has published. In addition, it may make available information or guidance about taxation issues that it considers appropriate, but again in consultation with HMRC. We consider this to be a proportionate response to the issues raised in the other place, but without falling into the difficulties that might have arisen under the original new clause moved by Mr Durkan. I beg to move.

Lord Mackay of Clashfern: My Lords, are we to assume that the IPSA will have responsibility for deduction and payment of tax?

Lord Hunt of Kings Heath: My Lords, my understanding is that it will and that it will exercise it within the proper framework for the deduction and payment of both income tax and national insurance.
	Amendment 8 agreed.
	Clause 7 : Investigations
	Amendment 9
	 Moved by Lord Jenkin of Roding
	9: Clause 7, page 5, line 5, leave out from "such" to "are" and insert "conditions as are specified by the IPSA under subsection (9)(d)"

Lord Jenkin of Roding: My Lords, I hope that we can take this amendment with Amendments 10 and 11. Noble Lords will remember that the Government tabled a fairly substantial amendment to the Bill in Committee, inserting subsections (4), (5), (6) and (7) in Clause 7. Subsection (5)(b) refers to,
	"such other conditions as may be specified by the IPSA",
	in relation to payments. Subsection (7)(c) also refers to,
	"such other conditions as may be specified by the IPSA".
	I have to say that I was totally confused: I did not know what those conditions referred to. However, the noble Lord, Lord Bach, very swiftly enlightened me by saying:
	"IPSA can impose conditions about which cases are suitable to be dealt with in this way".—[Official Report, 14/7/09; col. 1086.]
	Light dawned, and one then realised that this was quite an important part of the Bill.
	We now have the very full description set out on the first and second pages of the letter of 16 July written by the noble Baroness the Leader of the House, which explains clearly to what the provision refers; namely, that if a Member has made a claim which turns out to be of the kind referred to in the Bill and is of relatively minor concern, the commissioner does not have to refer the findings to the Committee on Standards and Privileges. I can well understand, as is explained at some length in the letter, that the IPSA may well want to attach some conditions to the circumstances in which that non-referral might take place, and it is to that that "other conditions" in the Bill refers. However, although the clarification has been made, the letter is not part of the statute. It may be sensible for the noble Baroness to say just a few words, perhaps not as long as her letter, to put on the record just what these conditions are about.
	It was said in the debate—I think by the noble Lord, Lord Goodhart—that it was important that people should know what the conditions are. One therefore asks whether they will be published or are relevant only to particular cases. It would be helpful if we could get some guidance on that. I beg to move.

Lord Goodhart: My Lords, as the noble Lord, Lord Jenkin, mentioned, I said in Committee that it is highly desirable that the Bill should contain provisions about what is to happen if no fault is found—which it does not at the moment. I notice that that is covered in Amendment 12 rather than in Amendments 9, 10 or 11, but I think that the noble Lord, Lord Jenkin, has treated them together. The noble Lord's suggestion in Amendment 12 that it should be a matter for a Member to choose whether the findings remain off the record or are published if he or she wishes it is perfectly reasonable.

Lord Strathclyde: My Lords, I rather agree with my noble friend on Amendment 12—

Lord Jenkin of Roding: My Lords, I have not moved Amendment 12; it is not grouped with Amendment 9. I can talk to it if it would be helpful. I cannot make two speeches; I was going to move it separately.

Lord Strathclyde: My Lords, I apologise to my noble friend. We shall talk to Amendment 12 when we get to it.

Baroness Royall of Blaisdon: My Lords, the conditions referred to in subsections (5)(b) and (7)(c) need not refer only to the conditions for the rectification of the error. They could equally well cover other conditions in relation to the commission of the error; in fact, they are more likely to do so given that a number of conditions in relation to the rectification of the error are already set out in the Bill.
	As I stated in the letter mentioned by the noble Lord, the requirement for conditions specified by the IPSA to be met allows the IPSA to set the rules about when the commissioner can decide not to refer a matter. To determine that a case should not even go to the Committee on Standards and Privileges where a fault or problem has been found is a serious matter. The power to set conditions allows consideration of what other controls may be needed on the exercise of that power. Conditions that might be set could include, for example, maxima for the repayments which could be acceptable, or conditions requiring a reference where there is a series of findings relating to the same member. It is in the Government's view essential that the IPSA be able to consider and review the conditions that may need to be met as the code evolves. As we said in Committee, these are not intended to provide extra hoops for MPs to go through, but to attempt to be open about the fairness of the procedures.
	When we discussed this part of the Bill in Committee, the noble Lord recognised that there would be circumstances with which the IPSA was faced which could not be predicted. He therefore accepted that it was reasonable for the IPSA to be able to set further conditions without specifying what those might be. He further suggested that the drafting could be improved by the insertion of "reasonable". He said:
	"The insertion of that word would simply act as a signal that, if the commissioner and IPSA found themselves with a case which might arouse strong emotions because people had behaved very badly, they should not be allowed to introduce vindictive conditions but, rather, reasonable conditions".—[Official Report, 14/7/09; col. 1080-81.]
	That point is already covered. If an MP has acted very badly, he will not have access to this procedure in the first place.
	In relation to overpayment of allowances, the MP must have acknowledged the breach and have agreed to remedial action. In relation to breaches of the code, the financial interest concerned must, in the view of the commissioner, be minor, or the failure to register inadvertent. The provisions in subsections (5)(b) and (7)(c) do not mean that the IPSA can use these powers to set out a series of conditions which have the effect either of undermining the other provisions of the subsections or the more general procedures which are to be drawn up under subsection (9). However, the Government accept that the noble Lord has made a case that these conditions, like the other procedures which the IPSA will draw up, should be subject to the same sort of consultation. For the reasons I have set out, we cannot accept the noble Lord's amendments as they stand and we want to keep the provisions in subsections (5)(b) and (7)(c ), but we undertake to bring forward an amendment in substitution for his amendment to subsection (9) which will make this provision subject to consultation. I am very grateful for the ideas put forward by the noble Lord and I look forward to bringing back an amendment at Third Reading.

Lord Jenkin of Roding: My Lords, I am immensely grateful to the noble Baroness for her support. We look forward to seeing her amendment in a couple of hours' time. The noble Lord, Lord Barnett, laughs because he suspects that the relevant debate will take more than two hours, but we look forward to seeing the amendment whenever it arrives. With that assurance, I beg leave to withdraw the amendment.
	Amendment 9 withdrawn.
	Amendments 10 and 11 not moved.
	Amendment 12
	 Moved by Lord Jenkin of Roding
	12: Clause 7, page 5, line 30, at end insert—
	"( ) The member may, if no fault is found by the Commissioner, require or refuse publication of the findings."

Lord Jenkin of Roding: My Lords, I am in the happy position of having already secured the support of the Liberal Democrat Benches and of my own Front Bench for this amendment. I hope that it will also have the Government's support.
	If a Member is found not to be at fault, and presumably with no blame, he may have incurred unwelcome publicity, in which case he might require the matter to be reported to the Privileges Committee so that it can become a matter of public knowledge. On the other hand, he may feel that the whole thing was a mistake, that there has been no publicity and question why it should go to the Standards and Privileges Committee. It seems to me that it should be his choice. If it has been found that he was not at fault, he can decide whether there should be publicity. I beg to move.

Lord Strathclyde: My noble friend's amendment seems eminently sensible. As he seems to be on such a roll with the Government, I very much hope that they will accept the amendment.

Baroness Royall of Blaisdon: As the noble Lord explained, his amendment would leave it up to the MP to decide whether a "no fault" finding should be publicised. We had some debate in Committee on 14 July about what should happen to publication of the commissioner's reports, particularly where there had been a "no fault" finding. I think that noble Lords were torn between concern for the position of the MP and concern that an inquiry could be conducted entirely in private with no transparency. In that case, what guarantee would there be that a "no fault" finding was genuine, or that the rules had been applied consistently, if the results of some investigations were not publicised?
	The Government believe that there should be a presumption in favour of transparency. We think it highly unlikely that an MP who is known to have been under investigation and has been cleared will not want a report to be made. Otherwise the issue would appear to have been left unresolved. The points about consistency of treatment I have referred to are extremely important. Moreover, we have heard much lately about "transparency being the best antiseptic". It is because of the perception that the present scheme is handled behind closed doors and according to arcane rules that much of the present public anger has been provoked.
	Having said that, the Government also believe that the question of whether there should be publication of a finding is for the IPSA to draw up, as the Bill provides. We do not think it is right that the Bill should seek to dictate this and we do not agree that it should be for the MP to decide whether or not a finding should be published. There must be a consistent scheme for this. It may be that the proposed consistent outcome is that "no fault" findings are not published. It may be that the proposed consistent outcome is that cases where the commissioner concludes that he or she can settle the matter without reference to the Committee on Standards and Privileges should not be published. The Government might think that is the wrong approach, but they still consider that this is for the IPSA to determine. In other debates noble Lords have asked questions about how we can be sure that the financial interests code will be applied consistently. One of the answers to that question is, "by making public the outcome of investigations". That should be, I would suggest, the starting point.

Lord Jenkin of Roding: That is a somewhat disappointing reply. By definition we are dealing with the case of a Member against whom no fault has been found. It seems to me that the initial stages of an investigation by the commissioner are bound to be conducted away from the public eye. The press will not be breathing over his shoulder, watching every move he makes. If he finds that there is absolutely no fault at all, and there has been no publicity, I cannot understand why that matter needs to be referred to the Committee on Standards and Privileges.
	The noble Baroness said that we should let the IPSA make the rules. It is probably not appropriate that we should divide on this issue this evening and I do not think that the House is in a mood for that. However, I hope that the IPSA will be persuaded to have some regard for the points that have been made in several parts of the House this evening that some consideration should be given to a Member's own position in those circumstances. That is all I am asking for. If the noble Baroness does not like that, she must express her views to the IPSA. I hope that the IPSA will take account of what has been said in this House.

Lord Lawson of Blaby: My Lords, my noble friend makes a very powerful case. Consistency is known as the hobgoblin of little minds. In this case it does not apply at all. I draw a parallel with people who give to charity. Sometimes people who give to charity like to have public approbation for what they are doing. Other people give to charity anonymously because they do not want other charities battering on their door. That is not being inconsistent. I hope that the noble Baroness will think of some way of going further to meet my noble friend's point. Not least, the IPSA could have a duty to consult the Member's wishes. It may be thought that there would be a presumption that the Member's wishes would be respected even though she may not wish that to be final.

Baroness Royall of Blaisdon: My Lords, I stand by what I said in response to the noble Lord, Lord Jenkin. The Government believe that this is a matter for the IPSA to decide. The IPSA may decide that it wishes to have a consistent approach, or it may not wish to do that. However, it is up to the IPSA. I hope that noble Lords will agree that it is appropriate for this matter to be left to the new body.

Lord Jenkin of Roding: My Lords, I am grateful to my noble friend Lord Lawson. I note that he will not speak in the next debate. I am concerned that an important debate is to follow and I do not want to waste time. I have heard what the noble Baroness the Leader of the House has said. I hope that the IPSA will take account of what has been said in this House. I beg leave to withdraw the amendment.
	Amendment 12 withdrawn.
	Amendment 13
	 Moved by Lord Pannick
	13: Clause 7, page 5, line 36, after "must" insert "be fair and"

Lord Pannick: My Lords, Amendment 13 would impose on the IPSA a duty to ensure that the procedures which it lays down for the conduct of investigations by the commissioner must be fair. Subsections (11) and (12) already require that the procedures must satisfy specific requirements of fairness, but all other matters of procedure are at present left to the IPSA, with no governing principle in the legislation.
	Given the novelty of the functions that the commissioner and the IPSA will perform in relation to investigating the conduct of a Member of Parliament, and that these new functions are being created in order to respond to the public demand for a transparent and fair system, it is necessary for the legislation to state that fair procedures are required. That would not limit the discretion of the IPSA to decide for itself what fairness requires in this context. But it would be helpful to IPSA, the commission and the public by leaving no doubt that the general criterion in relation to the important procedures is one of fairness. I beg to move.

Lord Lester of Herne Hill: My Lords, I added my name to this amendment and I would like to add one or two comments. As the noble Lord, Lord Pannick, indicated, judicial review would be extremely rare in this context. Therefore, inserting the word "fair" as a requirement of procedures would not make it more likely that the courts would become involved in deciding whether a procedure was fair. But as I said in earlier debates on the Bill, Members of Parliament are entitled to be treated fairly. I am sure that everyone in the House and the other place would agree with that. Since it is important that procedures be devised in the other place that ensure fairness, one of the important aspects of this amendment is to send a signal—in the Bill or in some other way—that this House hopes that the other place will ensure fairness in all its procedures. There may be other ways of dealing with this, but I ask the noble Baroness the Leader of the House, or whoever is responding, whether this might be done in some way to ensure fairness.
	I have one other slightly odd thing to say. For a different purpose, I have been looking at the procedures in Hong Kong—that remarkable, small but very energetic place. I found to my surprise that the Government there have dealt with members of the Legislative Council's expenses, complaints and anything else, including a fair procedure and an appeal, in the most remarkable way. I find it amazing, having taken it to bits over the weekend for another purpose, that they had been able to do that in the Special Administrative Region of the People's Republic of China. Hong Kong has a basic law and fairness spelt out. It does not have the sovereignty of Parliament, but it does have parliamentary privilege. At the very least, should we not ensure that Members of Parliament are treated fairly by saying so—either in the Bill, as this amendment suggests, or in some other way?

Lord Woolf: My Lords, I support what has been said about this amendment. One thing that none of us would want to see is the courts involved in the activities of IPSA except in the most exceptional circumstances. It is undoubtedly the case that if the courts were involved, they would say that IPSA was under an obligation to be fair. That is self-evident under the normal rules that the courts require on application for judicial review. But in these special circumstances, we want to avoid the matter being in any doubt so far as IPSA is concerned. The way to avoid that doubt is by having it clearly stated in the Bill that fairness is required.

Baroness Butler-Sloss: My Lords, I, too, support the amendment. The noble Lord, Lord Pannick, talked about various groups of people who want to see the word "fair" included in the Bill. Members of Parliament in the other House should have that in the Bill. It is important. There are a whole lot of things in Clause 7 about what IPSA must do and what the procedures must be, but the most important procedure of all is fairness in the way that IPSA carries out its duties.

Lord Mackay of Clashfern: My Lords, it is perfectly natural to have fairness expressed in this. We are not interfering with the House of Commons at all. Its procedures have to be dealt with in connection with its executive action. But as for the commissioner's inquiries and so forth, IPSA is making the rules and that those rules should be fair is almost self-evident.

Lord Hunt of Kings Heath: My Lords, I am grateful to the noble Lord, Lord Pannick, for allowing us to debate this matter again. I agree with the noble Lord, Lord Lester, that MPs are entitled to be dealt with fairly. As the noble and learned Lord, Lord Woolf, suggested, IPSA and the commission, as public bodies, will be under a public duty to act reasonably and that duty is analogous to the duty to act fairly. I have listened very carefully to what has been said in Committee. I have listened to the distinguished contributions of noble and noble and learned Lords who have spoken in our debate this evening and the Government are happy to agree with the amendment.

Lord Pannick: My Lords, I thank the noble Lord very much indeed. It is typical of the way in which the Leader of the House and the noble Lord have dealt with matters during the passage of this Committee.
	Amendment 13 agreed.
	Amendment 14 withdrawn.
	Clause 9 : Further functions of the IPSA and Commissioner
	Amendment 15
	 Moved by Lord Jenkin of Roding
	15: Clause 9, page 6, line 38, leave out subsection (6)

Lord Jenkin of Roding: My Lords, the noble Lord has taken me by surprise. He will remember that there was a discussion on the issue of the various commissioners in Committee and my noble friend Lord Higgins, and in particular the noble and learned Lord, Lord Woolf, asked why it was necessary to have two commissioners. He made the point that it could give rise to some confusion and even in our debate there has been confusion. We are dealing with two commissioners. There is the existing Parliamentary Commissioner for Standards, Mr John Lyon, CB, who the noble Baroness explained would remain responsible to the Committee on Standards and Privileges. Then she went on to refer to the second one as the IPSA commissioner who would deal purely with financial breaches within the framework set out by IPSA. In the Bill, he is actually known as the Commissioner for Parliamentary Investigations, but we understood what she meant. That is what he is called. He is referred to throughout as the commissioner. We have become used to that.
	To come back to the question of the noble and learned Lord, Lord Woolf, do we really need two commissioners? Would there be a possibility of a merger between the two bodies or might there be some transfer of functions? That leads us to the Bill. I was expecting there to be an amendment about the right of appeal, but it was not moved so this is all very difficult.
	We are dealing with Clause 9 on further functions. We come to the question of the possible transfer of functions between the two commissioners. The purpose of tabling this amendment was not necessarily to remove subsection (6) but to give the noble Baroness an opportunity to be a little more explicit about what the Government intend. It is not at all clear from this clause what functions might be transferred to the new commissioner; the Commissioner for Parliamentary Investigations. Why is the provision in the Bill? What functions might be referred to the new commissioner? Who is expected to take the initiative in proposing such a transfer of functions? When do the Government expect such a process to take place?
	One difficulty that has already been referred to this afternoon is that the existing parliamentary commissioner is not a creature of statute. His existence depends entirely on resolutions in the other place, whereas the new commissioner for investigations will owe his existence entirely to this Bill; he will be a creature of statute. Are the Government satisfied that Clause 9 as drafted will deal with this considerable difference in the origins of the two bodies?
	I am sure that I am not alone in looking for some clarification of what this clause is intended to bring about, and I hope that the noble Baroness will be able to give us some enlightenment. I beg to move.

Baroness Royall of Blaisdon: My Lords, I understand why the noble Lord, Lord Jenkin, wishes to have clarification of this clause. As he said, we have returned to a point made in an earlier debate by my noble friend Lord Campbell-Savours.
	The initiative for any transfer of functions must come from the Speaker. It has to be discussed with the Committee on Standards and Privileges as well as with IPSA. The Speaker has to lay any agreement to transfer functions before the House, and it cannot come into effect until the House has resolved to approve it. Therefore, I think that it is clear that there is little opportunity for a transfer of the sort of functions that noble Lords may be concerned about, because those who would be responsible for this transfer of functions would not make a recommendation unless they had decided that it was in the best interests of the House. Moreover, it is important to be clear that Clause 9(4) can only be used to transfer existing functions of the parliamentary commissioner for standards. The new statutory commissioner would then in essence be wearing those non-statutory functions as a separate hat. There would be no question of the statutory commissioner exercising his statutory functions in relation to those matters, and, in particular, the statutory commissioner would be acting in accordance with the standing orders of the House rather than the procedures of IPSA.
	So, in future, if the House of Commons and the Speaker of the House wish to have just one commissioner, not two, that would be possible. But that commissioner would wear two hats: he would wear one hat with his statutory functions and one with his non-statutory functions. However, I can assure noble Lords that there is no intention that this provision could be used to give the new commissioner responsibility for things that both Houses have made clear during the discussions on this Bill they would not wish him to take on. But there may be functions of the existing commissioner that are purely administrative which it may be thought useful in future to transfer to the new commissioner. That is why we have left the provision in the Bill, along with that for allowing the transfer of functions to IPSA in relation to the keeping of registers.
	It is therefore a process of evolution. We are future-proofing to some extent, because we believe that in future they may wish to transfer some administrative functions of the commissioner for parliamentary standards to the new commissioner—that is, the Commissioner for Parliamentary Investigations. We are enabling that process to take place should the Speaker of the House of Commons deem it fit.

Lord Campbell-Savours: My Lords, having spent some time on that committee, I say to my noble friend that it may well be that the commissioner in the Commons—the commissioner to the committee—should simply go completely so that there is only one commissioner. That system might work far more effectively. The only residual issues would probably be in the area of dealing with breaches in cases of advocacy, but those could be dealt with directly by the committee on privileges itself.

Baroness Royall of Blaisdon: My Lords, my noble friend may well be right, and the way in which the Bill is constructed would enable that process to happen. I therefore hope the noble Lord will agree that the amendment is not necessary and agree with the clause as drafted in the Bill.

Lord Jenkin of Roding: My Lords, I was not proposing that it should be removed from the Bill; it is perfectly obvious that it is a proper definition clause. However, the noble Baroness has given us some explanation of how she sees this developing. There are two different commissioners; they have different origins, as I said, and they have different roles. It may well be that there can be a process of rationalisation between the functions of the two. As she said, the number of people who have to be consulted and the consents that would need to be formed provide protection for both the public and the Members of another place. I am grateful to her for her explanation and, with that, I beg leave to withdraw the amendment.
	Amendment 15 withdrawn.
	Clause 13 : Expiry of provisions of the Act
	Amendment 16
	 Moved by Lord Tyler
	16: Clause 13, page 9, line 6, leave out subsections (3) to (5)

Lord Tyler: My Lords, last week, during the second day in Committee, we had a brief debate on the relative merits of two alternative arrangements for the review of the Bill after two years. The common ground between our amendment then, proposing a sunset clause, and that from the noble Baroness the Leader of the House, proposing a renewal clause, was that since the Bill had been given a fast-track procedure it should be looked at again within this two-year period. This reflected a generally expressed view in the other place that such a process was desirable. There was very strong support from the Conservative Front Bench, and indeed that was reflected again last week when the noble Lord, Lord Strathclyde, supported our amendment for a sunset clause. Indeed, in the debate against a sunset clause in the other place there were only two strong arguments: the first was that one year is too short, but we have met that; and the other was that it was not necessary for the whole Bill to be subject to a sunset clause, it was only those parts of the Bill from Clause 5 onwards that might require that process. There was also strong agreement in your Lordships' House last week that some form of review was required.
	We want in this amendment to try to achieve some consensus about the best format for that review. In both Houses there has been a widespread recognition that the speed with which we have dealt with this important Bill makes it a natural candidate for some form of sunset review. I heard earlier some exchanges between the noble and learned Baroness the Attorney-General and others about whether the Bill is now perfectly formed. I think that may still be a matter of some concern. However, what is certainly true is that in two years' time we will be much better able to make sure whether that is indeed the case.
	The consensus we are seeking to achieve is that while everyone now accepts that some form of review is necessary within the two-year period, we are saying—and the Government agree with this—that it should take place after two years from the date of Section 6 coming into force. Again, we have sought to compromise on that.
	On the other hand, we part company on the mechanism that the Government have suggested by which Parliament should review the working of this extremely significant legislation. The Government wish only to have the rather cursory procedure of secondary legislation, with an affirmative resolution and all-or-nothing debate on a statutory instrument. As we pointed out last week—this was reflected very extensively in the other place as well as here—that procedure has serious defects. First, it can easily lead to a confrontation rather than a careful consideration of different parts of the process. Secondly, as so much of the eventual architecture—again I pick up the word used by the noble Lord, Lord Hunt of Kings Heath—for this new regime will be developed at a secondary level and is not incorporated in the Bill, surely it will require more than the usual oversight of statutory instruments.
	We had another illustration of that in the debates earlier today. The noble Lord, Lord Campbell-Savours, put a point to the noble and learned Baroness the Attorney-General about the apparent confusion between the two commissioners. In reply, she said that there were issues that would have to be examined later on. The debate that we have just had, on the amendment from the noble Lord, Lord Jenkin of Roding, also emphasised that there are some unresolved issues here. It may not be necessary to resolve them in a particular way, but clearly they are unresolved. Therefore, that is an additional reason why it will be necessary to look very carefully at what has happened since the Bill's passage, when it comes back in two years' time. Moreover, if Members of both Houses are given only the stark choice between accepting or rejecting what I assume will be the parliamentary standards statutory instrument in 2011, they may well feel inhibited, not prepared, to seek detailed improvements to ensure that the new system is operating fairly and effectively. Finally, with no obvious improved system put before them to replace that Bill, how can they feel comfortable voting against that order? Your Lordships' House is always reluctant to vote against a statutory instrument, for very good reasons. The other place has a similar reluctance. It would be rather unfortunate if we forced it down that path.
	The noble Baroness the Leader of the House suggested last week that the Government of the day might risk leaving a complete void by not bringing forward a sensible set of proposals for the renewal of this legislation. Frankly, I feel that that is entirely fanciful. I cannot understand that any responsible Government would do that. Surely the onus will be on that Government, in two years' time, to make certain that all the lessons are being learnt, that Parliament is comfortable with any improvements that may be necessary—perhaps along the lines that have already been referred to this afternoon—so that the legislation can either be substantially reinforced or, more simply, renewed if that is all that is necessary. It could be done in a short Bill with full parliamentary scrutiny over the course of a few weeks. There need be no major logjam in the legislative programme. I beg to move.

Lord Mackay of Clashfern: My Lords, I certainly agree with the view that some form of review is required after two years, given the speed with which this important Bill has gone through. However, the procedure that the noble Baroness the Leader of the House proposed in her amendment in Committee, which is now incorporated into the Bill, requires affirmative resolution. That requires an affirmative vote in both Houses of Parliament. I should have thought that, if there was any serious dissatisfaction with how the system was working, it would be extremely difficult, if not impossible, to secure a majority for its continuation in both Houses. I therefore regard what the noble Baroness the Leader of the House has done as a satisfactory way of having this review.

Lord Strathclyde: My Lords, Clause 13 deals with a most important aspect of the expiry of the provisions of the Act, as it will be, and, in particular, a sunset clause. If we had been discussing the Bill as it was, I would gladly have continued to support the Liberal Democrats. However, the Bill has been substantially amended in its passage through Parliament. If there were no sunset clause attached to the Bill at all, I would still have supported the Liberal Democrats because I marginally prefer the sudden death of a sunset clause than this, which I think is rather euphemistically referred to in government circles as an "intelligent sunset".
	It strikes me that under the provisions of this clause the Government, in the next Parliament, will have three choices. The first is to continue what will be the Act by using the provisions under this clause. The second is to do nothing; the more difficult clauses will then fall and cease to have force. The third is to bring forward new primary legislation. I suspect that whoever is in government will probably come round to the fact that we will need new primary legislation. By then, Christopher Kelly will have reported; he has already made some very aggressive remarks on the Bill and the IPSA, so it may well be that none of this comes into effect in any case. The Bill was born in haste, has certainly been legislated in haste and, even today—although I very much welcome it—has been amended in great haste.
	Finally, I do not worry too much about the noble Lord, Lord Tyler, but I worry a little bit. My eye was drawn to an article in the Daily Telegraph at the end of last week that commented on the deliberations in your Lordships' House on the Bill. Comments were made by the leader of the Liberal Democrats, no less, who was fulminating in a rage at what he called the "two-party stitch-up"—that is the Conservative Party and the Labour Party—in defenestrating the Bill. However, the passage that he was most concerned about—the removal of the second defence under old Clause 8—was, of course, down to an amendment that had been moved by the noble Lords, Lord Tyler and Lord Shutt. I very much hope that they have full cover this evening from the leader of the Liberal Democrats in another place.

Lord Goodhart: My Lords, I intervene only briefly. I draw attention to the reluctance that amounts virtually to a convention of either House to exercise the power to reject statutory instruments, even if they require the affirmative resolution procedure, except in wholly unusual and disastrous circumstances. It is not good enough to say, as the noble and learned Lord, Lord Mackay of Clashfern, did, "Oh, well, all will be all right because, if there is trouble, all we need to do is reject the statutory instrument". I would have far more confidence in there being a review of the provisions of the Bill in two years' time if there was a sunset clause for this Bill of the kind proposed by my noble friends.

Baroness Hamwee: My Lords, because we are going back to an issue that we debated at the previous stage, I repeat my concern to see new primary legislation, because of the greater opportunities that that would give for amendment and reflection. Primary legislation need not take long—this Bill is in itself an example of that. If in two years' time there is general agreement that the Bill has worked well and needs no amendment, or if there is agreement as to what that amendment is—and some of your Lordships have anticipated that that might be the case—it would be dealt with by statutory instrument. In either case, the legislation can go through quickly, but there will be opportunities for a little bit of to and fro, dealing with and tweaking perhaps relatively minor matters, and fully reflecting the wishes of both Houses rather than the attitude of "OK, we'll let it go", which so often happens with a statutory instrument. There are good reasons for our arrangements for dealing with primary legislation at its different stages, and these arrangements deserve to be applied in two years' time.

Baroness Royall of Blaisdon: My Lords, I start by staying that I am seeking consensus, not defenestration. The argument of the noble Lord, Lord Strathclyde, is absolutely correct. If we had been discussing the Bill as it left the other place, perhaps noble Lords would have more of an argument in favour of the sort of sunset clause that is favoured by the Liberal Democrats. However, the Bill is now very different and the majority of Members of this House have more confidence in it as it is in leaving this place.
	We are setting up in this Bill a new institution. It is important that it should be independent and transparent in its working. The Bill will provide for that. It is also important that the new institution should be authoritative. The Bill provides for a distinguished membership of IPSA and that is as it should be. This will be an important body doing an important task. As such, it is important that we can offer the members of IPSA and the commissioner some stability; otherwise, we will not get the quality of appointments that we need. The Bill provides in Schedules 1 and 2 for appointments for five years, but this clause effectively provides for appointments for two years. I remain deeply concerned, and I am sure that many of your Lordships are deeply concerned, about what the amendment would do to the quality of those appointments.
	The Government have accepted that there is a need for a mechanism to review the working of this—I hope—soon-to-be Act. I am grateful for the words of support from the noble and learned Lord, Lord Mackay. This mechanism is important on two grounds. The first is the expedited passage of the legislation, although I believe that this expedited passage has not prevented good debate and detailed scrutiny of the Bill. Secondly, we are moving into uncharted waters and it is right that we should be able to take stock of how things are going. I promised at Second Reading that we would undertake detailed post-legislative scrutiny two years after Royal Assent—well within the five-year window that the Government have agreed to generally. That is what we will do. Having listened to further concerns, I brought forward in Committee the clause that is now in the Bill. Even that clause could be said to cast some uncertainty over the future of the commissioner and some of the functions of IPSA, but there is a crucial difference between the clause in the Bill and the effect of the noble Lords' amendment. The effect of the noble Lords' amendment would be that, regardless of how distinguished the membership of IPSA was, regardless of how well IPSA was doing its job, regardless of the level of public support that it achieved and regardless of the improvement in MPs' standing that had arisen from its work, at the end of two years' work the body would disappear.
	Noble Lords said in Committee on Thursday that, if IPSA and the commissioner were generally regarded as a success, it would be a straightforward matter to re-enact the legislation. That is precisely what the noble Baroness has said today. However, I think that it is a curious comment. We do not, on the whole, like passing legislation quickly. Your Lordships' Constitution Committee has already published its recommendations for what should happen to legislation that is passed under expedited procedures. That is one reason why I am against a sunset clause, as advocated by the noble Lords on the Liberal Democrat Benches. The noble Lord, Lord Tyler, suggested that the Government could plan to re-enact the legislation well in advance of when it was needed, but that would of course cut into the time that IPSA would need to establish and prove itself. For all those reasons, the Government have proposed a review clause for these parts of the Bill.
	I refute personally the suggestion that a debate on a resolution is perfunctory. I hear the fears expressed by the noble Lord, Lord Goodlad—

Noble Lords: Goodhart!

Baroness Royall of Blaisdon: My Lords, I beg your pardon. I meant the noble Lord, Lord Goodhart.

Lord Goodhart: My Lords, the noble Lord, Lord Goodlad, and I find that we get each other's letters quite frequently.

Baroness Royall of Blaisdon: My Lords, I am glad that I am not in charge of the post—it would be even worse.
	It will be up to Parliament to decide to wind these bodies up. It is up to Parliament to reject the statutory instrument that would continue the provisions. I accept that this is not something that is done lightly in this House, but it is an option. Indeed, it is an option for the Government not to bring forward the continuation Motion, but they would do that on the merits of IPSA and not on the basis of how much parliamentary time might be taken up in trying to renew the legislation. On the other hand, if IPSA and the commissioner are working well and have established themselves authoritatively, a simple vote in the House will ensure that they continue. This will give the bodies far more incentive to make sure that they deserve to be continued, since it will be less of a lottery whether they get that chance. I urge the noble Lords, Lord Tyler and Lord Shutt of Greetland, to withdraw their amendment.

Lord Tyler: My Lords, the noble Baroness the Leader of the House has referred to the Constitution Committee. We have all taken its report to the House on these issues very seriously. I must remind her again that it was that committee, in direct response to concerns about the Bill, that asked whether the Bill included a sunset clause as well as any appropriate renewal procedure and, if not, why the Government judged that the inclusion of those things was inappropriate. The committee is on my side in this argument.
	I am surprised that the noble and learned Lord, Lord Mackay, no longer supports a sunset clause. I think that he has demonstrated—as have many other Members of the House—that when we consider a Bill in full in this House, we like to give it the sort of careful attention that it deserves. That is simply not the case with a statutory instrument. As the noble and learned Lord and many other Members of your Lordships' House have demonstrated throughout the progress of the Bill, it is when this House is doing its job best that we are so necessary to the process of parliamentary scrutiny. That is why I think that, having accepted the need for scrutiny, as the Government have, many Members on all sides of the House will accept that our suggestion is more appropriate.
	I am grateful to the noble Lord, Lord Strathclyde, and not only for his support last week. I can forgive him for reading the Daily Telegraph, although I am not sure why anybody still does. He has pointed out again this evening that there may well be a necessity for new primary legislation. If there is such a necessity, the trigger for it must, of course, be a sunset clause. I hope that the noble Lord and his colleagues on the Conservative Benches will again support us on that. He has emphasised the point that, throughout the process in your Lordships' House, we have had to look very carefully at a lot of the detail and much of it is still not clear, as was demonstrated by the noble and learned Baroness the Attorney-General.
	There is no direct impact on IPSA from our sunset clause, any more than there is from the Government's Clause 13. There is some impact on the commissioner, but IPSA can do its job, knowing that it will have a continuing role. The noble Baroness the Leader of the House referred to being in uncharted waters. Yes, we are, and it would be wholly wrong simply to leave hanging in the air whether there will be a full-scale review of the Bill. If everything in the whole scheme introduced by this legislation is moving very effectively, is well accepted, has credibility and has the confidence of Parliament and the public, the Government of the day can of course introduce a one-clause Bill to remove the sunrise—or, rather, the sunset—clause. They will not need to do any more. Indeed, in a sense this will create a sunrise clause. If the noble Baroness the Leader of the House is so confident that everything is perfect now, what does she have to fear from this amendment? I wish to test the opinion of the House.

Division on Amendment 16
	Contents 60; Not-Contents 139.
	[The name of a noble Lord who voted in both Lobbies has been removed from the voting lists.]
	Amendment 16 disagreed.

Consolidated Fund (Appropriation) (No. 2) Bill
	 — 
	Second Reading and Remaining Stages

Moved By Lord Myners
	That the Bill be read a second time.
	Bill read a second time. Committee negatived. Standing Order 47 having been dispensed with, the Bill was read a third time and passed.

Finance Bill

Bill Main Page
	Copy of the Bill
	Explanatory Notes
	20th Report from JCHR

Second Reading and Remaining Stages

Moved By Lord Myners
	That the Bill be read a second time.

Lord Myners: My Lords, I am pleased to open the debate on this year's Finance Bill. As has now become customary, the Bill has been carefully looked at by the Economic Affairs Sub-Committee on the Finance Bill.
	I start by thanking the noble Lord, Lord Vallance, for his chairmanship of the committee, and its other members for their dedication and diligence in scrutinising what is, by necessity, a lengthy and complex Bill. I will respond to the points raised in the sub-committee's report later in my remarks, but I hope noble Lords will find it useful if I first briefly set out the context for our discussions today and describe some of the major effects that this legislation will have.
	This debate comes as both the UK and global economies continue to face major challenges. The financial crisis has caused a world recession, with consequences that are hurting individuals and firms in every country. In the UK, the Government understand the serious impact that the international credit crunch and economic slowdown are having on people and businesses, and have taken comprehensive action to support the economy and protect jobs through these difficult times.
	Recent figures from the National Institute of Economic and Social Research show that UK output fell by 0.4 per cent in the three months ending in June, after the decline of 1.3 per cent in the three months ending in May. The institute's assessment is that the UK economy is now standing still rather than continuing to contract at a sharp pace. The first part of 2009 was difficult for all advanced economies. The global downturn meant that growth fell in all G7 countries and in many major economies across the world. Figures for the first quarter of this year show Japan and Germany contracting by 3.8 per cent, Italy contracting by 2.6 percent and the US by 1.4 per cent. We always knew that the start of the year would be tough. However, as my right honourable friend the Chancellor said in the 2009 Budget, we expect growth to return in the UK at the end of 2009 as the action taken by the Government to tackle the global downturn takes full effect.
	We have seen other tentative signs that output is stabilising, but the Government remain cautious about the prospects for the economy. We cannot afford to be complacent; and, while we are confident about a strong and sustained recovery, we must follow through on delivering support for families and businesses. The Finance Bill provides for vital measures to support the economy this year and to help families and businesses through difficult times. It also provides for help to support the long-term prosperity of Britain and to ensure that public finances are sustainable in the future.
	The Bill extends until the end of the year the temporary VAT cut that is stimulating the economy by leaving more than £11 billion that otherwise would have been taken in tax in the pockets of consumers and businesses. There has been growing recognition that the measure is working. The Centre for Economics and Business Research stated that,
	"the VAT cut is working. It appears to be good value for taxpayers".
	Crucially, the Bill also introduces measures to support the public finances, which is a critical focus for the Government. We know that we must live within our means, and we are acting to keep the public finances on a sustainable path over the medium term. Consistent with our progressive principles, the fiscal consolidation asks for most from those who are most able to contribute and who have benefited most from the growth of the last decade. Consequently, the Bill creates the structure for the 50p rate of income tax from 2010 for those on incomes of more £150,000 per year—around the highest 1 per cent of earners. The Bill also provides for anti-forestalling provisions in respect of the planned restriction of higher-rate relief on pension contributions for the very wealthiest. To further support the public finances, the Bill implements increases in alcohol duty, which remained at or below the level of inflation between 1997 and 2007, and an increase in landfill tax from 2011, which will deliver emission savings equivalent to 700,000 tonnes of carbon dioxide by 2013.
	The current circumstances make it imperative that the tax base is protected and sustainable. We will not tolerate tax evasion and avoidance, which undermine fiscal sustainability, damage the delivery of policy objectives, impose significant costs on society and shift a greater tax burden onto ordinary taxpayers. Consequently, in addition to the measures to support the public finances in the medium term, the Finance Bill includes a package of measures to protect tax revenues that will raise more than £1 billion during the period 2009-10 to 2011-12, and protect a further £3 billion of tax receipts per year from evasion and avoidance by 2010-11.
	The Bill provides help for businesses, targeting it at those in most need while encouraging investment for growth in the future. The freeze in the small companies' rate of corporation tax will help more than 800,000 companies. The temporary extension of the loss carry-back rules, benefiting more than 140,000 businesses, will help many viable firms that face cash-flow difficulties. The Bill is helping to support investment by temporarily doubling, to 40 per cent, capital allowances for businesses investing now. That will benefit a further 60,000 businesses, and is in addition to the business payment support scheme, under which 168,000 agreements have already been reached with businesses, deferring tax payments of £3 billion.
	The Bill also introduces measures to support investment in North Sea oil, to bring in new fields while ensuring existing revenue is protected. The Government are determined to ensure that the UK is a competitive location for multinational businesses. This is why the Bill introduces a package of reforms to the taxation of foreign profits. The main change will enable a group's worldwide profits to be repatriated to the UK without tax being charged and without the need for complex double-taxation-relief calculations.
	The main change is complemented by further measures to enhance the attractiveness of the UK as a location for multinational businesses, while protecting the Exchequer. These include a reasonable restriction on our generous interest-relief rules; consequential changes to the controlled-foreign-company rules; and the replacement of the unpopular Treasury-consent rules with a much simpler reporting requirement. All of these changes have been subject to consultation and stakeholder engagement, and have been broadly welcomed by all sides, including by Opposition Members in the other place.
	I have already mentioned briefly the admirable efforts of the members of the Finance Bill sub-committee of the Economic Affairs Committee in scrutinising the Bill. I re-emphasise my thanks to the sub-committee for the thorough and helpful report that it has published. The report made a number of recommendations in certain important areas, and I will address some of the points now.
	Throughout the development of the draft Finance Bill, the Government have been guided by extensive consultation with industry and other stakeholders. Our approach to consultation in respect of the foreign profits elements of the Bill was specifically praised by the Finance Bill sub-committee's report. The report went on to say that the Government should apply the best aspects of this consultation to other consultations in future. It will not surprise noble Lords to hear that I and the Government are delighted to accept this recommendation.
	The report queried why, when the draft was published, it contained gaps, specifically on the debt cap. Normally it would be preferable to publish a complete draft, and we will continue to endeavour to do so, as far as we are able, across the board. However, on the occasion in question, we were making important progress in respect of those particular clauses in frank and productive dialogue with industry. We felt it preferable to continue to develop the clauses in the light of those discussions, rather than to present Parliament with half-cooked clauses that we would then seek to change significantly.
	The sub-committee's report went on to recommend that the changes to the taxation regime on high-value pension contributions be carefully monitored and reviewed to ensure that they do not adversely affect the UK's competitiveness as a global business centre. The Government have confidence that the measures in question will not significantly impact on our competitiveness. Other countries around the world are having to take comparable measures necessary for fiscal consolidation during these difficult economic times.
	Tax is only one factor in the UK's competitiveness, and the UK remains an attractive place to do business, as confirmed by the World Bank's Doing Business 2009 report, which found that the UK ranks second in the G7 and second in the EU for ease of doing business. However, we are not complacent and of course we will continue to keep all tax legislation under review to ensure that it continues to meet our policy objectives.
	The sub-committee's report also raised concerns that the anti-forestalling provisions in the Bill might negatively affect those who, for whatever reason, might legitimately make irregular contributions to their pension schemes. In response to this issue, the Government tabled an amendment to ensure that, where irregular contributions have been made over the past three years, the special annual allowance will be increased to the average of those contributions, with an upper limit of £30,000. For those with average irregular contributions of below £20,000, the special annual allowance will remain at £20,000. This extends full protection to the majority of non-regular pension savers and means that even the highest contributors see their cap on savings attracting higher-rate relief lifted by half as much again.
	This is a measured change, striking a reasonable balance between preventing the anti-forestalling regime driving up the costs of pension tax relief for the wealthiest individuals and enabling individuals to continue to receive higher-rate tax relief on pension contributions that they would have made in the absence of any announcement on the restriction of pensions tax relief from April 2011.

Lord Forsyth of Drumlean: My Lords, I am grateful to the Minister for giving way. On this specific point, when the pension reforms in 2006 were introduced, together with the very good rationalisation in the so-called A-day regime, the Government's policy was to encourage people in their year of retirement to make large contributions to their pension fund. How do these anti-forestalling provisions not result in those people being penalised, and what happens to people who were planning to proceed along that route on the basis of an undertaking from the Government only three years ago?

Lord Myners: My Lords, the Government would clearly encourage people to make appropriate provision for their retirement. At the same time, we wish to increase higher rates of taxation to ensure that the burden falls on those who, as a consequence of the great prosperity of the past 10 years, have enjoyed significant increases in income and to ensure that that increase in taxation cannot in some way be subverted by people contributing funds into pension schemes. Accordingly, a balance needs to be struck. We have listened to the contributions of those in the other place and have made amendments to our proposals to reflect the arguments that we have heard. I will no doubt come back to the subject of pensions in my closing speech in response to other points that I imagine will be made by noble Lords as the debate progresses.

Lord Forsyth of Drumlean: My Lords, perhaps the Minister will allow me to intervene again. I am not making a debating point here; this is a serious point. People thought, and were encouraged to think by the Government—it was the Government's policy—that they might be able to pay the whole of their final salary into the scheme in order to provide a pension. Of course, that is even more important now because of what has happened in the markets. People who contribute more than £30,000—which, I accept, is an improvement—will find themselves having to pay 20 per cent tax on that contribution. How can that be fair, and how can people depend on what the Government say if they change their mind so quickly and undermine people's planning?

Lord Myners: My Lords, the Government have not changed their mind; their position has been quite consistent in this area. We encourage people to save for their pensions but, at the same time, we cannot make commitments which necessarily bind future Chancellors or future Governments. No one was given an assurance that that arrangement would remain in place in perpetuity. As I said, I am sure that we will come back to pensions later in the debate and I will cover any points raised in my closing remarks.
	The final recommendation in the report that I would like to touch on relates to real estate investment trusts. The report recommended that the Government look again, taking account of international experience, at what kind of measures would be necessary to get more REITs. The acquisition of property by a UK REIT is subject to the normal rules on stamp duty land tax. The charge to companies becoming REITs at the rate of 2 per cent of the market value of their investment properties at the time of conversion was essential to ensure that the UK REITs regime was introduced at no overall cost to the Exchequer. That is a reflection not just of the latent capital gains of existing companies converting to UK REITs but also, importantly, of the favourable tax regime offered to any UK REIT in the future. We will continue to keep the UK REITs regime under review as part of the normal Budget process.
	Once again, I thank members of the Finance Bill sub-committee for their hard work and thoughtful recommendations. In the development of the Finance Bill, and during its passage through Parliament, the Government have at all times been guided by our progressive principles and our desire to build a stronger, fairer Britain. We believe that the policies that the Bill implements will help us to overcome the current economic challenges and will lay the foundations from which Britain can grow and prosper. The measures in the Bill are good for individuals, good for business and good for the economy as a whole. I commend it to the House.

Lord Lang of Monkton: My Lords, I begin by declaring my interests as set out in the Register of Lords' Interests in case anything that I may say could be thought to impinge on them. I continue by complimenting in advance the noble Lord, Lord Vallance of Tummel, and, through him, the Select Committee on Economic Affairs for its report on aspects of the Finance Bill 2009, which we now debate at Second Reading.
	As usual, the committee has chosen specific items from the Bill and provided useful scrutiny and comment on them. However, the Bill is derived from the Budget, and the Budget and more recent developments in the economy form the background to today's debate. The fact that the economy shrank by 2.4 per cent in the first quarter—as the committee points out, the fastest rate for more than half a century and far worse than expected—provides a truly serious background to our deliberations. Sadly, this House cannot amend the Finance Bill but we can question the Government and offer our own views and I begin by brief reference to the three topics that the committee chose to examine: foreign profits, the pension annual allowance and real estate investment trusts.
	As so often these days, the recurring criticism which has coloured debate on the Bill and which the committee's report echoes is the lack of consultation before rushing to legislation. It was with masterly understatement that the committee concluded that,
	"it is not good practice that the Finance Bill should be incomplete at the time of publication".
	This policy of "shoot first, ask questions later"—the kind of YouTube politics favoured by the Prime Minister—should have no part in consideration of a Finance Bill, or indeed of any other.
	The noble Lord, Lord Vallance, and other noble Lords participating in the debate will doubtless wish to debate these matters more fully but, on foreign profits, I simply urge the Government to take on board the recommendations of the committee and to delay implementation of the worldwide debt cap, which runs the risk of incentivising debt, until there has been a chance for further proper consultation, as the committee requested. The distinguished witnesses whom the committee met described this issue as a "Frankenstein monster". Clearly they felt strongly about it, being of the view that the Government had not yet got it right.
	On REITs, the committee pointed out that the reforms,
	"failed to live up to expectations".
	They did not, as Deloitte pointed out, go far enough. That there are no residential REITs, nor any new ones, that are not converted from property companies suggests underlying structural defects in the design of the scheme.
	On pensions, I acknowledge that some progress was made in Committee in another place on, for example, anti-forestalling and the responsibilities of senior accounting officers, but that progress was only very limited. Why do the Government not realise the importance of encouraging savings as part of a sound economy? Now they seem obsessed with restricting and penalising, through piecemeal and ill considered legislation, those who would save through their pensions. So soon after the redesign of the whole system, it is unsettling, to say the least, that what looks like a morass of potential tax traps has now been imported, piling on complications where simplification would be preferable. Surely the Prime Minister has damaged the pensions sector enough over the years. What is needed is a stable, predictable and fair environment.
	As for the rest of the Finance Bill, lengthy and complex it may be, as the noble Lord, Lord Myners, said—that is the habit of Finance Bills—but it does little to address the great issues that we face. We see what can only be described as snide little political wheezes like the 50p tax rate brought forward by a year and increased by 5p simply to try to wrong-foot the Opposition. Is there no limit, one wonders, to the extent to which the Prime Minister is willing to demean himself and debase his office? Did he learn nothing from the 10p tax rate debacle?
	The latest measure was condemned by all informed opinion, such as the Institute of Directors, the Institute for Fiscal Studies andErnst & Young. Far from raising the Treasury's planned £2.4 billion, the combination of avoidance, emigration and a consequential fall in indirect tax revenues must surely erode that figure substantially—similarly with the £12 billion VAT reduction, to which the noble Lord also referred. Notwithstanding the fact that he has rounded up support from one organisation, I believe that that was another ill judged irrelevance, denounced by retailers and the public alike, both of whom might have been thought to be beneficiaries at a time when massive discounts of 20 per cent and often much more were being offered to help them to survive the recession.
	What thought did the Chancellor give to the real impact that will come when he restores his cut on 1 January next year? That will be the sting in the tail to an economy in crisis. The fact is that the Budget managed to be both an odds-and-ends ragbag that contributed nothing to recovery and, by common consent, one of the worst in modern times. It was bad because of what it failed to do. It failed to provide a theme—a vision even—of how to address the debt crisis that is poised to overwhelm the country. How, for example, do the Government plan to solve a debt crisis by piling debt upon debt? The Budget failed to instil confidence. It breached manifesto commitments and it undermined competitiveness and still we wait to learn how the Government plan to tackle the public finances that they have so wantonly destroyed.
	Last year, the Chancellor predicted that the Government would need to borrow £38 billion this year. Now that forecast has increased to £175 billion, almost five times as much. The Prime Minister had said that he wanted the International Monetary Fund to be an early warning system. On Budget Day, the IMF warned him within an hour of the Chancellor sitting down that the decline in GDP this year would be not 3.5 per cent but 4.1 per cent and that the budget deficit would be the worst in the G20 next year, at 11 per cent of GDP.
	From the perspective of three months later, the Budget can be seen as inaccurate, inadequate, irrelevant and one more wasted opportunity to start the recovery process, just when it was most needed. But the IMF has gone on to warn that Britain is the only leading economy in the G20 that is unable to budget for any kind of package next year. Not only that, but the Chancellor must start paying back debt much earlier than next year's Budget. Is it not time now for the Government to spell out their plans, instead of hiding them for electoral reasons, so that we can start to shore up international confidence?
	However, this is a Government with form. Despite the strong and growing economy that they inherited in 1997, they have not achieved a budget surplus since 2001, the year after the plans that they had inherited from their predecessors ran out. Through all the years of plenty that followed, while other countries were reducing taxes and building reserves, this country was doing the opposite. Even at the top of the cycle, the Chancellor was still running a 3 per cent deficit, while lecturing others on what they should be doing. As the OECD has pointed out with regard to the UK, fiscal policy is constrained by weak budgetary policy. It has also forecast that our fiscal deficit will climb to 14 per cent next year, the worst in the industrialised world.
	In 1997, all the economic indicators were strong and heading in the right direction. Now they are all weak and heading in the wrong direction. Productivity, a vital and often overlooked measure of economic health, is down by 4.7 per cent in the first quarter of this year. In manufacturing, it is down by 8.3 per cent, almost double the fall of the previous quarter. Business investment fell by 7.6 per cent in the first quarter compared with the previous already poor quarter. That is hardly surprising considering the continuing credit famine. Exports of goods fell by £4.1 billion in the first quarter and our overall deficit in trade in goods last year was £93 billion—so much for the proclaimed benefit to exporters of a weak pound. GDP in the production industries is down by 12.5 per cent in two years.
	As regards employment, in the first quarter of this year public sector employment rose by 15,000, while private sector employment fell by 286,000. I regard both those figures as bad news. Since March the deterioration has accelerated dramatically, with youth unemployment leading the way. One can imagine not only the heartache and misery that that must cause but also the massive and growing cost to the public purse at a time when revenues are drying up. I fear that that trend has much longer to run.
	As the Government scrabble around over the next few months trying to find green shoots, they will be clutching not at green shoots but at straws. All they will find is a lunar landscape, with mountains of debt stretching to the horizon and a dust cloud of inflation hovering above it. Already soaring upwards, borrowing will be more in the next two years than the entire accumulated debt of all previous Governments since the 17th century added together. It will double the national debt. We will be paying more in interest on those debts than on the whole of the education budget. I believe that the bloated state of our public finances will delay our recovery from recession, not hasten it. Unless we get to grips with it soon, the situation will get even worse.
	The Government want to sell £220 billion of gilts this year and they are competing with, among others, the United States, Germany and Japan, which alone are seeking between them to raise £2.7 trillion. Therefore, the possibility of a gilts strike and the collapse of sterling cannot be ruled out and the consequences of that would be calamitous. I have no wish to sound unduly alarmist, but this should come as no surprise, because if we include, as we should, the cost of rescuing the banks, off-balance-sheet PFI liabilities and public sector pension liabilities, the United Kingdom's gross liabilities already exceed 275 per cent of GDP and, while the liabilities and debts are rising, GDP is falling.
	On top of public debt, personal debt, with the active encouragement of the Government, has reached the highest levels in the world, at 186 per cent of disposable income—higher than America's 142 per cent and, indeed, the highest that any G7 country has ever seen. We have one of the lowest gross national savings ratios in the world, while house price inflation averaged 9.3 per cent in the decade before the credit crunch, compared with 3.9 per cent in America.
	The damage wrought by this "dysfunctional" Government—to quote their colleague in this House, the noble Lord, Lord Sainsbury of Turville—is literally immeasurable. It will take years, indeed decades, to repair and it has been caused not just in the past two years of panic and misjudgement but cumulatively over the past decade. It comes as no surprise to learn only today that for the first time in 350 years the Treasury has had its own accounts qualified by the National Audit Office.
	The noble Lord, Lord Myners, says that the Government are not complacent, but it seems to me that they are not in control of events. It is easy to say that the crisis is international and that it all began in America. Of course, what happened there partially triggered the denouement, but it also began in the United Kingdom. Northern Rock collapsed before Lehman Brothers. Our banks and building societies were every bit as extended as America's and they were poorly regulated as a result of the Prime Minister's fateful changes of 1997. I warmly welcome my honourable friend George Osborne's clear-sighted proposals to reverse the split-level responsibility that has so damaged banking regulation.
	Our housing market was every bit as overheated, overpriced and overborrowed as America's, the result of easy credit fanning the feel-good factor to win votes. With our public spending levels, our high taxation, our deficits and our debt, ours was not an economy whose fundamentals were stronger than others, as the Prime Minister and the Chancellor repeatedly claimed. It was not an economy uniquely well placed to weather the storm, as they also claimed. It was and is the reverse of those things. It is uniquely weak, uniquely overextended and irresponsibly managed. We urgently need an exit strategy. We need firm decisions to tackle public expenditure and borrowing levels before confidence in sterling collapses and inflation engulfs us. Yet the Government prevaricate; they do nothing and say nothing. This year's Finance Bill, like the Budget and recent government behaviour, is largely irrelevant to the truly dreadful problems that the nation's finances face. The day cannot come soon enough when a new Government can come to grips with them and get down to rebuilding our country.

Lord Vallance of Tummel: My Lords, I am very pleased to introduce the report of the Economic Affairs Committee on the Finance Bill 2009. It is the seventh annual report in a series that has now become well established and confirms the role of this House in the parliamentary scrutiny of finance Bills. Our sub-committee on the Finance Bill provides a forum, not available in the other place, for taxpayers and their advisers to express their concerns and for officials to respond. I should like to thank my fellow members of the sub-committee for their wise contributions, their non-partisan approach and their necessarily speedy and intensive work. I am also grateful to our witnesses, professional and official, our specialist advisers, the clerk and our secretary-administrator.
	The sub-committee has to focus, and this year it examined three topics: tax relief for pensions contributions; the taxation of foreign profits; and real estate investment trusts, or REITs for short. We also followed up our examination last year of two cross-cutting issues: consultation and international competitiveness.
	First, on pensions, we accept that the Government have to be free to make such changes as they think fit, but we were concerned that the proposed restrictions to relief for pension contributions, limiting them to the basic rate of tax for high income individuals, risk damaging pensions savings. New rules for pensions came into effect only three years ago. It is very early to make a highly significant change. Although its scope is limited to high-income earners, it may be seen as the thin end of the wedge. A good tax system needs simplicity, consistency and certainty, especially in a long-term business such as pensions. The changes have an adverse effect on each of these qualities. Only a comparatively small number of taxpayers are directly affected, but they set the policy of their companies' pension schemes and their approach may be coloured,especially as employers' contributions are also affected. We think there is a real risk that savings will switch away from pensions.
	We accept that the Government's aim is a level playing field between defined-benefit and defined-contribution schemes, but in practice that may be difficult to achieve. It is not easy to assess the value of contributions to a defined-benefit scheme. We are also concerned that the scheme may lead to exceptionally high marginal rates of tax. The CBI gave an example where the marginal rate was 145 per cent. More consideration is needed on both these areas in the consultations on the substantive scheme.
	Given the potential benefit of simplification, we were attracted by an alternative approach of simply restricting the annual and/or the lifetime allowance. By contrast with the Government's proposed changes, this would have been consistent with the present scheme of relief. However, the incidence and impact of a change of this nature would have been very different from those of the Government's proposals and, with considerable regret, we concluded that this was not a line we could pursue.
	We questioned the need for antiforestalling measures. There was a legitimate expectation that relief would continue at the taxpayer's marginal rate. It would not have been unreasonable to allow people time to adjust their affairs. In any case, additional contributions would have been limited by the annual and lifetime allowances as well as by what people could afford. In our report, we said that solutions would need to be found for all those individuals who have good reason for not making their pension savings regularly or frequently, who include the self-employed and those retiring or made redundant. As the noble Lord, Lord Myners, outlined, subsequent changes to the Bill have met some concerns, certainly those of the self-employed, and that is welcome, but it is disappointing that, as we understand it, there has been no real recognition of the impact on those who retire or are-made redundant.
	The taxation of foreign profits was our second chosen topic. The foreign profits package was introduced after much consultation. It encompasses the exemption of foreign dividends, a cap on allowable finance expenses and the replacement of the Treasury consent rules by a post-transaction reporting requirement. It was very difficult for our witnesses to assess the overall package while there were still gaps in the Finance Bill proposals. Many government amendments were made in the Commons Public Bill Committee. This is the second year in succession that we have had to comment on this aspect, which is very disappointing. The sub-committee was also disappointed that dividend exemption, which was universally welcomed in principle, had been marred by complicated and controversial drafting. We recommended that wherever possible in future, there should also be consultation on drafting.
	The restriction of interest relief via the debt cap was least welcomed, and we were not greatly reassured by the responses of officials. We were concerned that a long period of consultation had left some important issues unresolved. We were also very concerned about the complexityof the debt cap provisions, and we recommended further dialogue with the representative bodies, either to discuss changes or to persuade them that further changes were not appropriate. We recommended that in view of the problems with the debt cap provisions, their implementation should be further delayed unless those problems could be resolved during the passage of the Bill. The private sector will still be considering the amendments made in the Commons Committee. If it is content, that is a welcome outcome; if it is not, we urge the Government to consider holding off until there is resolution.
	We had few comments on the changes to the rules on controlled foreign companies. We welcomed the changes concerning the rules for Treasury consents and for putting their substance into regulations.
	Our third chosen topic was real estate investment trusts or REITs. The sub-committee was concerned that REITs had not lived up to expectations. Although they were introduced to promote greater efficiency and flexibility in the property market and to counter shortages in the housing market, there are no residential REITs or new commercial ones. Obviously, market conditions have been a major factor, but that was not the whole answer. There are also structural weaknesses in the legal framework for REITs, and the Finance Bill, as published, did not tackle those issues. We proposed that a variety of measures should be considered. Some were comparatively minor, such as looking again at the industry's "snagging list", and others could be tailored to meet the current economic circumstances, such as allowing the payment of scrip dividends. Others could be more significant, such as reducing the entry charge, which might enable the original purposes of the scheme to be met just as the market may be turning. At the Commons Report stage, the Government went some way towards meeting our concerns by introducing a provision to cater for REITs in severe financial difficulties and promised further discussion on scrip dividends. These are welcome responses, if far from addressing all the issues we raised.
	More generally, REITs were introducedfollowing well handled consultations, but since then, officials have appeared complacent and unduly cautious, with perhaps too much emphasis on issues such as cost without looking at the broader picture. We suggest that much could be learnt from international experience, particularly that of France.
	I now return to the two cross-cutting issues that I mentioned earlier, the first of which is consultation. Given our sharp criticism of the consultation before last year's Finance Bill, we were keen to see how good it had been this year. We were left with a favourable impression across the board of how the consultation on foreign profits had been handled. The one aspect that concerned us, as I mentioned earlier, was that when it was published, the Finance Bill was incomplete. We recommended that HMRC considers very carefully why it did not allow itself sufficient time to complete the consultation and the subsequent drafting process.
	We concluded that, given the nature of the changes, it would have been very difficult for the Government to consult on pensions, even informally. However, we thought that Her Majesty's Treasury and HMRC were at fault in failing to consult on the novel and contentious measures on the duties of accounting officers of the largest companies and on naming and shaming serious tax defaulters. We were not persuaded by the reasons given by officials for this lack of consultation. Some changes to the accounting officers' provision have been made in consultations since the Budget, but it would have been much better if they had been made earlier. We recommended that in future there should be consultation on all such issues, and we hope that it will not be necessary to revert to this aspect in a future report.
	The second cross-cutting issue is the effect of the measures that we examined on the international competitive position of the United Kingdom. There was general agreement that some parts of the foreign profits package were positive but others much less so. The outstanding issues clearly need to be resolved before the full impact on competitiveness can be determined. We thought that the opinion of officials that the pension changes would have little effect on competitiveness was likely to be overoptimistic, and we recommended that the effect of the changes should be monitored carefully. The likely impact on the UK's competitiveness of the Finance Bill provisions as a whole is difficult to assess; it might be narrowly positive if the concerns about the debt cap rules can be resolved.
	In summary, our report was less critical than last year, with more things to welcome to balance our criticisms. Our main concern was that the Government have underestimated the risk of damaging pension savings by changing the long-standing rule that relief for pension contributions should be given at an individual's marginal rate. Although only some of our concerns about this year's Finance Bill have been met during its passage, I hope the House will agree that our reports are valuable in strengthening parliamentary scrutiny and drawing attention to the concerns of taxpayers and their representative bodies.

Lord Best: My Lords, as a member of the Economic Affairs Committee and the Finance Bill sub-committee, I will take up the third of the three topics on which our report concentrates: the real estate investment trusts, or REITs, which the noble Lord, Lord Vallance, mentioned. The sub-committee took the opportunity to review their progress since the introduction of the REITs regime in January 2007.
	The REITs concept was introduced into the UK by the Finance Act 2006. Its aim was to improve the quantity and quality of finance for investment in property and remove tax distortions, in particular the hazards of double taxation, for property investment companies. Minor technical changes have been made to the REITs regime in every Finance Bill since 2006, and the measures in this Bill are modest but useful and welcome.
	In considering whether the arrangements have worked satisfactorily overall, the committee concludes that the regime was successfully launched, has been well handled and has operated well for large existing commercial property investments groups that have converted into REITs, of which there are now 21, with assets of some £30 billion. However, the Government made it clear when they introduced the REITs model that they hoped this would attract investment into the residential rented property world as well as into the commercial sector, thereby helping to meet the acute shortages of homes that are needed in this country, as identified by the review by Kate Barker at the Bank of England.
	On this score, we must conclude—and the committee did—that the REITs regime has failed us. No new REITs of any kind have been formed. In particular, no new REITs have been formed to invest in residential property. This failure of successive Finance Acts means that the opportunity to draw in large-scale institutional investment into the private rented sector has so far been lost. REITs are of considerable importance in the USA and, with the unwinding of the buy-to-let market in the UK, there has never been a time in which investment in the private rented sector has been more needed.
	We know from Kate Barker's analysis that we need to build something like 240,000 new homes every year. Indeed, the independent National Housing and Planning Advice Unit has recently recalculated the figures and come up with a new figure of 257,000 homes that are required each year. Yet house builders building homes for sale are unlikely to do better than about 80,000 homes in the current year. That is far, far below the level that is needed. It seems likely, with house-building in the doldrums and the lack of available mortgage finance stretching into the future, that this low level of house-building for sale will be continued for some years to come. A healthy private rented sector could fill that gap and meet the needs of the growing numbers of people who cannot afford to buy and, for different reasons, do not want to take on mortgage commitments.
	At present, we rely on individual small-time investors: the buy-to-let investor. According to a recent report for the Government by Julie Rugg of York University, there are now something like 1.2 million private landlords, very many of whom have a single property in their ownership. This produces considerable disadvantages in the quality of management that one can expect, compared with that of an institutional landlord who can afford the professional skills of proper larger-scale management. It means that a lot of investors are looking to the short term, rather than in the long term in which institutions are more interested. It also means that these small-time investors are not in a position to commission the building of new apartment blocks, as can institutions that are looking for large-scale opportunities in which to invest.
	Without the REITs model working, we are missing out on the opportunity to bring in the huge sums of money that are so badly needed in housing and that are not likely to be found from simply building homes for sale, on which we have relied for the past 20 years or more. Moreover, the attractions to institutional investors of a residential investment model that works are considerable. Rents—noble Lords will recall that the Rent Acts were abolished more than 20 years ago—are likely to rise in line with earnings rather than with the RPI. That can match the requirements of institutional investors in property. Rents could rise that sensible margin ahead of the RPI in line with incomes each year; yet the institutions are steering clear of those investment opportunities because we do not have a real estate investment trust model that works for us. Market conditions have been blamed for any of the REITs failing to materialise for residential property investment. They were also blamed when property prices were rising rapidly and yields were falling correspondingly. Now, market conditions are again blamed for the absence of REITs when property prices are falling. This suggests that, as the committee concluded, it is the system itself that is not what it should be and not simply a matter of market failure.
	The committee concluded that the modest measures on REITs in the Finance Bill are useful and welcome, but, as it says,
	"no-one has claimed that they will make any ... difference either to the number of REITs or to the recovery of the property market".
	Further changes, like the treatment of cash under the balance-of-business test and the payment of dividends other than in cash, are well worth further consideration, but the chief concern of the committee was the policy failure to see any residential REITs established. The committee's report commented that,
	"the official attitude appears to us to have bordered on the complacent and unduly cautious".
	Will the Minister take forward the committee's firm recommendation that advantage be taken of the excellent consultative machinery that now exists between the Treasury, the British Property Federation and the Royal Institution of Chartered Surveyors to review the workings of the REITs system and see whether the huge potential for investment in residential property cannot now be unleashed?

Lord Barnett: My Lords, I thank the noble Lord, Lord Vallance, for what he has said and how fairly he has summed up the unanimous views of the sub-committee, on which I was happy to be able to participate. I will not deal with all four of the issues with which we dealt; I will deal just with pensions. As always, we did not look at these matters from a political standpoint. We did not have a Minister before us. We had only officials. I say "only", but we had the people who matter on these occasions. HMRC was unable to answer for us what is happening, for example, on the effects of the policy—although we were not looking at the policy— on savings, on pensions and on the future of people who save. I declare a past interest as a substantial beneficiary, like many in professional activities, who invested through annuities, and received tax relief and benefits from it. I thank whoever was in charge at that stage.
	After our committee had met, I put down a Written Question on whether the Government agreed with the CBI, which said that there was an effective tax rate of 150 per cent in some circumstances. The answer from my noble friend was that they did not agree, but it was a somewhat less than absolutely clear reply. He tried again this evening, but he did not altogether convince me then either. When he winds up, I should like him to have another go at perhaps 149 per cent or 100 per cent. What is likely to be the effect on, possibly, a small number? That small number is not unimportant because professional men and women prepare for their retirement in a variety of ways. This way is very important both personally and, from the point of view of the country as a whole, it is beneficial. I hope that my noble friend will give us a clearer reply.
	However, I mainly want to say a few words about the economy. As one recognises on these occasions, the noble Lord, Lord Lang, made a great deal of his criticism of the present economic position of the country. I listened carefully to what he had to say—but unlike the unanimous views of the Select Committee, for which I thank him, on the Barnett formula where I absolutely agree with what it said—but tonight I found him less than constructive in his alternative proposals to what the Government are doing. No doubt, future speakers—there seem to be a great number of them on the Opposition Benches—will give us the benefit of those constructive proposals. The noble Baroness, Lady O'Cathain, is pointing to this side of the House, which I appreciate, but the Government have got my noble friend Lord Sheldon and I, and they are more than happy with the two of us.
	On the economy, I very much agree with what the Government are trying to do. They have not, during the course of a recession, started to cut public expenditure and perhaps increase taxes. That would not reduce debt; it would be more likely to increase it. I very much agree with the Government, but that is about the only thing on which I will agree with them tonight. Precisely what do they propose to do—I know that my noble friend likes to be precise on these occasions—when the recession comes to an end? Incidentally, I was pleased to hear him say that—he told us about a sort of preview of the Pre-Budget Report—we are at the bottom now. I have forgotten his exact words, but he certainly implied that we were out of the recession. Perhaps I may add that he did not refer to green shoots. Outside the Government, economists almost across the board have come to the conclusion in their guesses—we all know that they are guesses—about the future of the economy that the recession is largely coming to an end. Unlike my noble friend, they seem to feel that when the upturn comes it will be rather slower than seemed likely even in the last Budget. Perhaps my noble friend would comment on that too.
	When the recession comes to an end and we are in a reasonable upturn, the important question that faces any Government is how they will balance the books—except no one balances the books—and bring them more closely into line and sustainable. I should like to know whether my noble friend has seen the report—I have not—which was referred to in the press this morning, about the study on public expenditure by the King's Fund and the Institute for Fiscal Studies. The Guardian had a headline, "'Tax or axe' warning on future NHS spending". It is clear that with an ageing population—I am happy to say especially for Members of your Lordships' House—the National Health Service—whoever is in charge, private or public—will need to spend rather more than less in the years to come. In many areas of National Health Service spending more will need to be spent. The article quoted the study as saying that "across-the-board" there would need to be a,
	"2.3%-a-year cut in spending",
	which did not exclude the National Health Service.
	With £700 billion of public expenditure of course there is waste. Everyone talks about cutting waste. When I had some slight responsibility as Chief Secretary to the Treasury, public expenditure was a much lower figure and I had to cut it for five years almost, but there was waste. There is always waste. When £700 billion is being spent, there is bound to be waste even when it is being spent by the private sector, let alone by the Government. Everyone is in favour of cutting waste, but how it is done, and where and when, we have yet to hear from any of the major political parties.
	We are told that all parties are telling us the truth about the fact that there will be a need for cuts after 2011. On the surface that is being honest and telling the public the truth, but just saying it does not tell us where people are going to be hurt, and when. Speaking for myself as a former, retired politician—an emeritus politician, unlike the Cross—Benchers in your Lordships' House—I do not expect either of the major parties to tell us, before the election, where it will hurt. We will not hear the truth, but we will hear talk of honesty. But we will not hear anyone say precisely where the cuts are going to fall, on whom and when.
	However, major cuts will have to be made when the recession is over, and very likely tax increases as well. I would be surprised if VAT does not go up substantially. VAT has been mentioned in this context, and if the recession is not really over, I do not know if the Government will seek to extend the cut for another year; it may be sensible to do so. Again, I wait to hear what my noble friend has to say. However, on public expenditure, on the tax front and on balancing the Budget, will my noble friend tell us whether it is the Government's clear intention when we see a reasonable upturn in the economy—not a huge rise but perhaps 2 or 3 per cent, which were the average levels of the past—to make those precise cuts after the recession is over?

Lord MacGregor of Pulham Market: My Lords, as a member of the Finance Bill Sub-Committee of the Economic Affairs Committee, I pay tribute to our Chairman for the excellent way in which he chaired our meetings. I am also the chairman of several pension trustee funds, one of which is in a company which is a REIT. I want mainly to talk about pensions tonight, but will first say a brief word about the other two matters. The impression I gained from our witnesses is that there is clearly favourable progress on consultation, although an exception should be made for the measure on the duties of the accounting officers of large companies and the naming and shaming of serious tax defaulters. The first, especially, would have benefited from public consultation and I can see no reason why they could not have been subjected to that.
	On the measures related to foreign profits and REITs, about which the noble Lord, Lord Best, has talked so eloquently—at least those in the Budget as distinct from those that were not—the comments were more favourable than unfavourable. With the pension proposals, it was an entirely different matter. I accept that this was not an issue for prior consultation. Had the Government done so, they would have received devastating criticisms of the sort we heard from all our witnesses except HMRC. It was not a lack of consultation that concerned the committee, but the substance. I have to say that I have rarely heard such unanimous, persistent and outspoken criticism. I have sympathy with HMRC which had difficulty in dealing with the criticisms because this was clearly a politically motivated decision driven by the need in the current economic and fiscal circumstances for whatever tax revenue the Chancellor can find. He identified this one as an easy political target that would not attract widespread criticism in most constituencies. After all, it is about people with incomes of £150,000 or over, and most constituencies have comparatively few of those.
	That may explain why there has not been a major public fuss about it, except as expressed by the witnesses to our committee. It is a bit like the notorious ACT measure of 1997 in that its damage was not recognised by the wider public at the time, despite the efforts of many of us to draw attention to the consequences. Later, however, its devastating impact on pensions has become all too apparent. I agree that this particular set of measures is not on the same scale, but it will have something of the same impact. Many people with incomes much lower than £150,000 will feel the effects. As I listened to the litany of criticisms in our witness sessions, it became clear that this is likely to be a major mistake. The issues are summarised in paragraph 144 of our report, which states,
	"the expectations raised by what had been said in 2004, the risk to pension savings, the comparatively low risk of forestalling in practice, the complexities of three regimes in five years. The need for a level balance between DB [defined benefit] and DC [direct contribution] schemes, the need to take account of special cases and the administrative and compliance costs".
	I want to single out just four of the criticisms, the first of which relates to forestalling.
	I recognise that the Government made some changes at the Committee stage in the other place, particularly on irregular payments, but we heard a good deal of evidence about the effect on those who have been made redundant and in many cases are in receipt of a pension contribution over the figure envisaged in the Bill, in particular those who had been planning for retirement. People were expecting to make a major contribution to their pension contributions to achieve a higher figure just prior to retirement, but had not made the same level of contributions in earlier years. With great respect, I thought that the Minister was floundering in answer to my noble friend Lord Forsyth when he said—I think I have it right—"Nobody was given an assurance that those rates will remain in perpetuity". He certainly said the words "in perpetuity". I have to say to him that there was certainly no expectation that there would be change so soon and so quickly, and many people were planning for retirement not very far ahead on the assumption that they would remain. I would be grateful if the Minister would comment on that because there are areas of forestalling that have not been tackled and are still unfair.
	The second point is that I just do not believe that this measure will raise the tax revenue predicted by the Government for it. A very high tax rate is now applied to those who have been affected by the changes, and there is no doubt that among many companies and advisers a great deal of discussion is going on to bring forward proposals on substitute schemes for compensation packages. In other words, people will not be making maximum contributions to pensions; they will be putting the money elsewhere where it will have a better overall effect. HMRC has substantially underestimated the range of alternatives for many who are affected and therefore overestimated the revenue.
	Thirdly, as we all know, defined benefit schemes are already in a fragile state. It sometimes seems that companies, including major companies, are closing them down not only to new employees but to existing employees almost every month, if not every week. Time after time we hear of major companies that are making major changes to their defined benefit opportunities. This is just another nail in the coffin. The effect of the key decision-makers in companies disengaging themselves from company schemes and finding them less attractive can only accelerate that process. As we put in our report, while the numbers directly affected may be small, among them will be individuals who are influential in determining the pensions policies of many companies.
	The most worrying of all, and by far the most important, is my fourth criticism. After long consultation, the new regime, commencing with the A-day measures in April 2006 following the Finance Act 2004, was widely welcomed and hailed for its simplicity and flexibility. The Government hailed it as a transparent, consistent system, giving everyone for the first time—I challenge the "everyone"—the same opportunity to make tax-relieved pension savings over a lifetime. Above all, it was put over and accepted by everyone in the pension industry—companies, pension advisers, potential pensioners and pensioners—that there was a guarantee and an assurance of certainty in this new regime and an end to the chopping and changing of pension tax regimes. Now, after only three years, this has been broken and, combined with all the other non-tax issues that are currently adversely affecting pensions, even this assurance of continuity in the scheme has gone. A precedent has been established that the A-day tax regime is not certain; that if it can be attacked by a desperate Chancellor so soon, will there not be other changes year after year? In particular, a precedent has now been set for taxing employer contributions. Even the long-established fiscal rule that pension contributions are tax free because pension payments are taxed at one's marginal rate when one becomes a pensioner has been undermined.
	I shall quote from three witnesses who appeared in front of us. The CBI said that the net effect will be to disincentivise pension savings completely. The Chartered Institute of Taxation expressed a worry that it will mean a complete reappraisal as to the value of pensions provision. The National Association of Pension Funds said that it will be a disincentive for employers to contribute, particularly to defined benefit schemes but to defined contribution schemes as well.
	In justifying the introduction of this measure, the Chancellor said that it was difficult to justify how a quarter of the cost of pensions tax relief went to the top 1.5 per cent of earners. But surely, after such a long period of consultation and gestation before the introduction of the regime, the Government had worked that out and knew what they were doing when they introduced the new regime. I do not think that that is in any way a proper justification of what has been done.
	The decline of defined benefit started in 1997 when another ill thought-out measure removed £5 billion a year from pension funds, now, cumulatively and compound; a huge sum. I accept that some of the reasons for the decline in defined benefit schemes—some of them substantial—are not the consequence of any actions by the Government: on the asset side, the effect of increased longevity in the mortality rates; on the liabilities side, an accounting and actuarial system based on gilt rates so that when they come down the liabilities rise. That can fluctuate widely even over a short period and so one has substantial changes in the apparent deficits.
	On top of all that, this is another serious blow to defined benefit schemes. Many people recognise that defined contribution and personal pensions do not offer the same advantages. As a result, we now have two nations—the private sector pension provision and the public sector pension provision. Now is not the time to repeat all the comments about the unfairness and huge future costs of public sector pension schemes. The Government clearly will not tackle this in the remainder of their time and in their enfeebled state. This makes this financial measure, which will not raise the tax revenue the Chancellor predicted and which will add even more to the decline of private sector schemes, even more unbalanced and ill thought through.

Lord Forsyth of Drumlean: My Lords, I add my congratulations to the noble Lord, Lord Vallance, and the sub-committee Although I serve on the Economic Affairs Committee, I escaped being on the sub-committee because I had been drafted by the noble Lord, Lord Barnett, on to the Barnett Select Committee, which produced an excellent report last week.
	So here we go again, with another Finance Bill in two volumes—500 pages of stuff. Despite the Government's commitment to simplify the tax code, having doubled that code, and with us now having the longest tax code in the world—longer even than India's—we get another 500 pages of stuff. It has come to this House having not been scrutinised properly by the other place and, judging by the Minister's speech, has not even been fully understood by those who are responsible for the implementation of the legislation.
	And what are we doing? We are debating the Bill at a late hour on the eve of the time when Members of the House of Commons will disappear with their buckets and spades until October. Given the seriousness of the economic crisis, which my noble friend Lord Lang set out in his excellent speech, it is shameful that we should be reduced to doing this at this hour. Given the hour, though, the Minister will no doubt be relieved to hear that I will resist the temptation to use this as an opportunity to critique the Government's economic policy. I shall focus on the committee's report and some aspects of the Bill.
	The Minister is beginning to get a bit of reputation for not being completely straightforward in taking criticism. In his speech he was keen to point out the parts of the report that praised the Government's record on consultation, but he neglected to mention the criticism of the consultation process on the shaming of defaulters and on the duties of accounting officers at large corporates. If he is going to raise what the committee had to say about consultation, he should not just pick out the cherries that show the Government in a good light; the point of these debates is to address the criticisms and inform the House what he is going to do to ensure that it does not happen again.
	The Minister drew attention to the anti-forestalling measures. I do not know if he has had a chance to read the evidence that was given to the sub-committee. I was particularly struck by the evidence from the Association of Taxation Technicians—not a particularly exciting organisation, I would have thought, nor a particularly partisan one, but the criticisms that my noble friend Lord MacGregor has pointed out are searing and scathing, such as those on anti-forestalling.
	Had the Government not had these anti-forestalling measures, we would have saved no fewer than 13 pages of legislation and 52 pages of guidance. That is what the anti-forestalling legislation that the Minister referred to adds to the tax code. In the evidence, the memorandum from the Association of Taxation Technicians says about the Government's anti-forestalling measures:
	"The Government's position here is entirely without logic. If they wish to restrict relief to 20 per cent only from 2011, why introduce provisions which in effect apply that restriction immediately? If they truly wish to restrict relief with immediate effect, why not simplify the legislative process by eliminating both the deferral to 2011 and the 'anti forestalling' rules? On grounds of simplification alone, surely the post-A Day pensions regime has already suffered enough from needlessly over-complex legislation?".
	What are this Government doing if they are not listening to representations of this kind? We heard nothing—perhaps the Minister will deal with this in his wind-up—that dealt with the considerable concerns that have been expressed.
	I should perhaps declare an interest, as I may well be affected by the changes to the pension regime that are contained in the Bill. Does the Minister have any idea how much this has undermined confidence in our pension system throughout business in this country? In every boardroom now, senior executives, particularly if they are still hanging on to a final-salary pension scheme, are considering how they are going to remunerate their senior staff because it no longer makes any sense for them to make a contribution to the pension scheme if this regime goes ahead after 2011. Does he recognise how creating this uncertainty means that people no longer have faith in the system, and will look for other ways where they will have more control over saving their capital?
	I noticed that in his speech the Minister said that the measures were aimed at the wealthiest. Are the people who are immediately about to retire, the unemployed, the self-employed and entrepreneurs the wealthiest? All of them, according to the evidence that was given to the committee, will be seriously damaged by these changes.
	The most important thing here is the breach of principles. I thought that it was an established and agreed principle across the parties that you did not pay tax when you made a contribution to a pension fund but that you paid the tax when it came out. The Government are breaching that principle. As my noble friend Lord MacGregor pointed out, it has gone almost unnoticed that a new principle is being established, which is to treat employers' contributions as an emolument for the first time. That creates a new seam from which this profligate Government will be able to mine further revenues. The Minister might say that it affects only the very wealthiest, but he has breached principles, which will enable the Government to continue taxation of people on lower incomes, just as they have done with national insurance.
	I agree with my noble friend that it is just extraordinary that we could have had a simplification of pensions, for which I praised the Government at the time: I think that eight or nine different schemes were brought together, and we had A-day. I do not know whether the Minister was able to escape the City in time, but, for the rest of us, a cap was put on the amount that we could put into our pension funds, which was accepted. The capped benefit was the Government's attempt to deal with high earners and to ensure that there was balance in the system. Everyone accepted that, and then, three years on, here is the Minister tearing up the plant and changing it. That is deeply disturbing, and would be even if we had a scheme which was workable and not destructive, as this Bill makes it.
	The Minister's response to my earlier intervention was completely unsatisfactory. He said that there was never any intention to give people who were making a final contribution in their year of retirement a kind of blank cheque for the future. Why did the 2004 Act make provision to remove the limit entirely for people who were crystallising their benefits in their year of retirement if it was not the Government's intention to encourage it? That legislation was implemented in April 2006. People who were planning their retirement and planning how they would build up that fund—not wealthy people who get big bonuses in the City—now find themselves completely undermined by the Government who brought in the legislation. What are we to make of the thinking that is going on?
	As the proposals stood, someone who was made redundant and wanted to invest their £30,000 redundancy cheque in their pension fund could find themselves having to pay tax on it because of the anti-forestalling measures. I do not know whether the change to the £30,000 limit that has been made in the other place would affect that. Perhaps the Minister could reassure me in his reply.
	Then there are the self-employed, who have good years and bad years and put money aside as and when they can. How on earth are they supposed to average their contributions, and why is it necessary? The splendid people from the Association of Taxation Technicians set out very clearly in their document—I hope that the Minister might find time to read it; I shall not detain the House—why the anti-forestalling measures are entirely unnecessary and counterproductive in their effect.
	People who find themselves made redundant and unemployed—they may have been on a high salary and then get a job—will find that, because they had no income in the previous year, the averaging scheme discriminates against them. What an extraordinary thing, to penalise people who have lost their jobs by preventing them making up to their pension scheme what they were unable to contribute because they had been without employment and income.
	I have not seen the Minister's answer to which the noble Lord, Lord Barnett, referred—that was remiss of me—but he suggested that it was not entirely clear. The CBI states on page 39 of the evidence that,
	"the total tax rate levied on pension saving by the new system, taking into account reduced tax relief, lifetime allowance charges and tax paid in retirement, will be in the region of 70-80 %".
	It rightly concludes:
	"This figure, when combined with a significant tax charge on the employer contribution, will make it sensible for most senior managers in firms with defined benefit schemes to leave the pension schemes, or to seek shorter time working arrangements to avoid triggering a punitive tax regime".
	What a terrible condemnation of the Government. What drives this vendetta? People who do not buy annuities at the age of 75 are already subject to an 82 per cent take in tax. The silly regime which the Government are introducing will see people facing tax rates of more than 100 per cent. I do not know how the Minister can assume that is not the case, because on page 65 of the committee's evidence he will see some worked-up examples which show how people end up with a marginal rate of tax of 100 per cent and more.
	So what will happen? What will these wealthy people about whom the Minister is concerned do? They will go out and buy buy-to-let properties and their gains will be taxed at 18 per cent and not at high rates of tax because of the stupid capital gains tax regime that the Government have brought in which has created such a huge differential between tax on income and now tax on moneys which are put into savings. All of this is occurring at a time when, according to Deloitte, the FTSE 100 companies have deficits on their pension funds which have doubled to £300 billion since January.
	This is the last of these Bills before the Government need to face the judgment of the electorate, and for that we must be thankful. I was quite struck by the front page headline of the Sunday Times this Sunday. It stated:
	"Lord Myners attacks bankers' greed and finds God".
	It said that the noble Lord,
	"was increasingly exercised and concerned with the fact that we have compromised our lives. This is very evident in the financial community—that money has become everything. People have lost their sense of purpose".
	I have to say to him that people want stability; they do not want uncertainty and they want the Government off their back. If the noble Lord is concerned about the Gospel, he might turn to Matthew on the subject of Judgment Day where it is said that Jesus tells us that the sheep will be separated from the goats. The goats are deserting this Government in droves. I suggest to the Minister that this might be time for a sharp exit. Presiding over legislation like this does no end of harm to his reputation. At least some members of the Government will be able to plead that they did not understand what they were doing. He has no such excuse. He says that we must live within our means and yet in a reply to me on 17 June at Question Time he assured me that now that he was in charge of the Government debt office there was no need to worry about raising the £900 billion extra in debt without there being a substantial increase in interest rates. I am with my noble friend; I think there is considerable cause for concern.
	Last week the IMF said:
	"The United Kingdom has been getting the benefit of the doubt both in the government bond market and also the foreign exchange market. The benefit of the doubt is not going to last for ever".
	The United Kingdom may have the benefit of the doubt but the Minister has lost it.

Baroness O'Cathain: My Lords, as we have heard, each year since 2003 the finance sub-committee of the Economic Affairs Committee has inquired into selected aspects of that year's Finance Bill. The resulting reports are always of a very high standard and do much to increase understanding of the rather arcane nature of the Finance Bill. I suspect that the sub-committee is not greatly loved by the Government. In passing, I make the observation that, if the sub-committee's work were to be extended to inquire into more than three aspects of the Bill, there would be a commensurate increase in understanding and almost certainly a similar increase in government irritation. The chairman and members of the sub-committee are to be congratulated on giving great service to this House and contributing to the general awareness of issues that are normally put into the "too difficult to understand" box.
	In my few words this evening, I intend to concentrate, like several previous speakers, on pensions. I declare an interest as a pensioner, although I say in my defence that I have been concerned about pensions long before I became a pensioner. Pensions have always—at least until recently—been a most successful way of saving. Savings are one way in which an individual who is capable of working hard and who has been blessed with talents, education, opportunities and health should be responsible and not rely on the state to support them in their old age. My noble friend Lord Lang of Monkton was strongly critical of the likely effect on the attitude of people to savings of the taxation of pensions suggested in the Finance Bill.
	The 17 pages in the sub-committee's report, in chapter 3, on the taxation of pensions should be required reading for those who have a suspicion that the Government rate pensions as an easy target—a gold mine that yields untold riches for the Government without too much digging and mining. Why? Because each raid on pension schemes and each change of the rules is couched in massively opaque terms and is virtually incomprehensible to all but the ever mushrooming group of pension consultants.
	The pension section of the Finance Bill 2009 is no exception. It truly is par for the course and the sub-committee has done a great service in throwing some light on it. We have been reminded several times this evening that, when the overhauled regime of the taxation of pensions came into effect in 2006, the Government maintained that the reform would,
	"bring simplification and increased flexibility that will ensure a transparent, consistent and flexible system that is readily understood, making it easier for people to concentrate on deciding when and how much to save for retirement".
	Three years later, the new system that was designed, I repeat, to "bring simplification", be "readily understood" and make it,
	"easier for people to concentrate on deciding when and how much to save for retirement",
	was shunted aside and a punitive disincentive that threw people into confusion was introduced.
	The greatest casualty in the recent financial meltdown has been trust. The latest pension proposals—this action by this Government—further erodes trust, or is there any trust left? The witnesses from the private sector who appeared before the sub-committee expressed concern that the measures introduced would have a significant impact on the scheme introduced just three years earlier; my noble friend Lord Forsyth clearly and cogently made that point. The 2006 changes were made after much consultation, which was acknowledged by all as a very good thing. What consultation was undertaken on this change, or is consultation another casualty of the financial meltdown? I heard what the noble Lord, Lord Vallance, said in acknowledging that it would have been difficult. I am sure that that is correct, but should that absolve the Government from undertaking a thorough analysis of the likely impact of the changes, or are they just dismissive of the essential contribution of those most likely to be affected?
	The Government will state that the changes apply to only 2 per cent of the workforce, so is that all right? No, it is not. Do the Government not realise that in any organisation the introduction of different levels of incentive—or disincentive in this case—will have a destabilising effect? Those down the line will look at what is now being seen as a target group ripe for government penalty. How will that encourage others—the younger, ambitious staff who willingly contribute to pension schemes—to act in a responsible manner and hope not to have to rely on the state during their old age? I am not so sure that, along with the effect on trust and on the concept of consultation, this action will not have a deleterious effect on the savings inclination of further generations.
	Much has been made of the effect of this move on people who can and may move overseas. But gone are the days when graduates entering the workforce joined a company and stayed there for life. Mobility is an ever present reality and many young, ambitious professionals have almost complete flexibility to move overseas. The sub-committee's comment, repeated by the noble Lord, Lord Vallance, that the,
	"precedent may be seen as the thin end of the wedge",
	and could risk,
	"a reduction in pensions savings",
	is surely a valid one. I wonder what the Minister feels about that. There is hardly anyone better placed to have firm views on it.
	The sub-committee's report highlights the risk that the highly paid may look for other means of saving instead. Some of those means have been mentioned here this evening, but it could also take the form of payment in kind rather than an increase in salary. Do we want to return to the days when the higher-paid executive spent an inordinate amount of time devising ways of circumventing pay restrictions? The most farcical one that I encountered was the collection on a weekly basis of suits—yes, suits, but gentlemen's suits—for dry-cleaning. The most politically incorrect one was the payment of public school fees, but that was in the days before political correctness. What is sure is that there is an army of compensation consultants ready to give advice on how compensation should be fixed to avoid being penalised by reaching the point at which taxation on pensions kicks in. Will that help the country pull itself out of the deepest recession for decades? I think not.

Lord Sheldon: My Lords, the noble Baroness, Lady O'Cathain, was quite right in pointing out the way in which the Government have tried to simplify the pension scheme. It is very difficult to do. It is such a complicated area and there are so many ways in which people earn their money and put their money in. I am afraid that this is one of those things that we will have to live with for many years to come and look at these points again and again. My noble friend Lord Myners pointed out the situation in the other G7 countries—3.8 per cent in Germany, 2.2 per cent in Italy and 1.4 per cent in the United States—and the unexpected decline in the United Kingdom. Of course we have had it even worse in some ways. So this will be a problem that we will live with for a very long time.
	In the Second Reading debate on the Finance Bill in the House of Commons, there was a defence of the Government's measures for guiding Britain out of the recession. It was said that a failure to act would cost us more in the long run and that these were vital measures to help the economy now and to support Britain's long-term prosperity. It was also said that the world's economy was shrinking for the first time in peacetime since 1932. This is one of the great changes that we have seen. It was a financial change and nobody could expect that the decline in the world's economy would go in that kind of way. It is the first time that five major banks were, as we saw in some astonishment, rescued by their national Governments, demonstrating the scale of the international challenge that we are facing. We did not expect anything like that—to see such a decline in banks which had such a very high reputation but which went very rapidly into some decline. Investment in manufacturing industry has been waning, but we hope to see it increase.
	One important part of the Bill is the introduction of the new 50p rate. It will be introduced in 2010 as one of the measures in the Bill and will bring borrowing back down once the economy is growing again. I myself have been uneasy about the 40 per cent level for the extremely large capital and income coming from people with considerable wealth. Keeping 40 per cent over such a long period was quite unjustifiable. I hoped to see an increase. We had to wait a long time to see it and we will have to wait a little while yet.
	There is also a gradual reduction in the personal allowance for those earning more than £100,000 and a reduction in pension tax relief for those on more than £150,000. This is another thing that we will see. It will echo the kind of requirements that people feel are justifiable. It is right that those on the highest incomes should pay more because, over the past 10 years, we saw the earnings of those on the very highest incomes increase by an average of much more than we might have expected over the period.
	The detailed legislation on tax avoidance and evasion will bring in some valuable revenue. A number of comments have been made that dealing with tax avoidance and evasion takes an awful lot of legislation. Of course, it does not last all that long because things change, so you have to make changes and get further legislation, which is more complicated and less reliable. That is a consequence of how these things operate. It is right that those concerned must take these matters into account.
	The important point of our April Budget is that there has been a greater instability than at any time for generations. The real problem is that investors assumed that the considerable and long-term growth rate would continue indefinitely, as did the banks. In their efforts to win much of the business from investors, the banks provided loans at exceptionally low rates of interest. As a result, there were many who invested much more than they would otherwise have undertaken. The big rise in unemployment meant that those who had invested at the top of the market lost a substantial amount. A major consequence has been a strong downturn in the housing market.
	What is not clear is how long the downturn is going to last. One important Minister said that the downturn will not conclude until 2017. That may be the kind of result to expect, but it is much worse than we had ever anticipated.
	The Bill deals with evasion and avoidance in great detail and we have heard the consequences of, and some of the problems that arise from, that. My noble friend Lord Myners pointed out that the £11 billion VAT cut would be over at the end of this year. That is a substantial amount. There has been too much criticism of it. I think that it is going to be rather valuable by the end of the year. The introduction of 15 per cent VAT for the current year was an important step in countering the economic downturn. The advantage of this move was its quick injection into spending by consumers. It may not have been seen as an important step but it was a change in the economic situation that would be difficult to effect quite so rapidly in other ways. Other methods can be introduced, but the delay in their effect on the economy means that there would be little consequence on the situation. At the end of the year, we will see a big spending increase as we approach Christmas. I expect that a combination of Christmas, the end of the year and the expectation that prices will rise in 2010 will see a considerable increase in expenditure. That will have some effects on the markets as well.
	In the Times, my noble friend Lord Myners has said that banks and their "grossly over-rewarded" executives are partly to blame for causing the economic recession. He has said that the,
	"golden days of huge bonuses",
	are over. Executives had,
	"no sense of the broader society around them".
	He said that the bank system came close to collapse last October, before the rescue package:
	"There were two or three hours when things felt very bad, nervous and fragile".
	We have now seen a move to a more stable situation, but it is not a very happy one. The United Kingdom is now in recession, which has had a considerable effect on the economy. The widely accepted definition of a recession—two consecutive quarters of negative economic growth—was met last year and it was something that we had not expected or seen for nearly 20 years. The worse-than-expected contraction sent sterling to a 24-year low, with the pound buying $1.355. Meanwhile, the FTSE index fell almost 2 per cent to below 4,000 points. We hope that, by the end of 2009, we will have introduced some hopeful expectation. It will not be rapid, but at least it will be an improvement on what we have seen this year.

Lord Higgins: My Lords, reading the Evening Standard after lunch today, I came across a story which alleges that the Treasury's accounts have been qualified for the first time in 350 years. I view that with some scepticism since I do not think that the National Audit Office has been in existence for that long, but in all events the error appears to be in the area for which the Minister is directly responsible, namely the banks and so on. Perhaps he could clarify the situation for us. In particular, why does some unnamed official say, "Don't worry, it's a technicality. We have"—I was going to say "written off"—I think he said "signed off the accounts"? Perhaps the Minister could clarify that.
	To try to find some guidance about what was in the Bill, I looked at the Second Reading debate in the other place. I found an extraordinary situation where the Chief Secretary did not so much make a speech as engage in a conversation. She seemed to have no idea whatever of how to control a debate. She was constantly interrupted and, at the end of the day, clearly had not made the speech that she intended to make. I was rather short on illumination as to what the Chief Secretary thought the important issue was. Be that as it may, the interruptions certainly concentrated very much on the 17.5 per cent rate of VAT. I am very sensitive about VAT. A long while ago, I had the job of steering the whole of the legislation through the other place. At that time we set a rate of 10 per cent, which was sufficient to make up the revenue that was lost from abolishing two very bad taxes—purchase tax and selective employment tax. Alas, successive Chancellors—including, I am bound to say, Conservative Chancellors— have put it up to 17.5 per cent, but I think the temporary reduction that the Government have introduced is a serious mistake.
	In his opening remarks the Minister quoted an organisation—I forget which one—which said that the temporary cut in the 17.5 per cent rate was "value for money for taxpayers". I have been trying to work out what on earth such an expression might mean. How is a temporary reduction in tax extraordinarily good value for taxpayers? It has meant something like £11 billion or so—mere chicken feed nowadays. None the less, it is completely offset by borrowing, on which the same taxpayers will have to pay interest in due course. More particular concern was expressed in the other place about timing and the fact that, apparently, the rate will go back up to 17.5 per cent at what is likely to be the busiest time of year for the retail trade. No information on this point was given in response to the numerous interruptions. Perhaps the Minister can tell us whether the Government have had any further thoughts on the exact timing.
	It will also have a curious effect on the CPI. The CPI has finally reduced to below the Bank of England's target rate of 2 per cent. In his Budget Statement, the Chancellor said that he expected the rate to fall to 1 per cent by the end of the year. At that moment, there will be an increase in value added tax, which will of course increase the rate. Whether this is a conspiracy whereby the Bank of England can get back to its target rate, having finally reduced it far enough, is not entirely clear. However, it seems that this measure is misconceived and has been a mistake, which was recognised as such, particularly against the background of the overall borrowing side of the management of the economy and the Debt Management Office, which the Minister, I am pleased to say, is in charge of. At least, if we cannot give it back to the Bank of England, which we certainly should do, management of the debt is something that he can look after with some expertise.
	A number of my noble friends have commented on the size of the Bill. Its size is absolutely appalling. However, we should be glad that the sub-committee in the House of Lords is looking at detailed proposals and can be selective in what it studies. The Select Committee on the conventions between the two Houses came down strongly in favour of the House of Lords having a role in this respect. The fact that we are restrained on financial matters has gone beyond the stage where we should seriously think about it. It is right that we should engage ourselves more—not least because there is vastly more expertise on financial matters in this place than there is in another.
	I want to say a word or two about the report of the Joint Committee on Human Rights as regards retrospection. I have always been strongly of the view that one must distinguish between tax avoidance and tax evasion. We have had exchanges across the Floor on this matter. It is clear that tax avoidance is legal and that tax evasion is not; but as a result of sophisticated accountants working on various schemes, from time to time we find ourselves in a situation whereby the Revenue has to catch up with the schemes that have been devised. In that context, the report of the Joint Committee is very worrying. It may be felt, in extreme circumstances, that there should be retrospection, because the Revenue did not catch up immediately on particular schemes, even though the Revenue is now informed of them. However, the report points out that it is extraordinary that we are introducing retrospective legislation which involves going back seven years. There might be a case, if a cunning scheme is discovered, that the Revenue could say, "We can't catch this immediately; it is a bad thing; and we will go back a year or so"; but to let a matter run for seven years and then clobber people is extraordinary. The Joint Committee points out that people are going bankrupt as a result of this, having operated for seven years on what they believed to be a perfectly legal basis. Perhaps the Minister can give his views on that.
	Finally, perhaps I may say a word or two about the general economic situation. One of the features of this year's Budget was the extent to which people—indeed, people almost universally, if there is such a concept—regarded the Chancellor's forecasts as overoptimistic. Noble Lords may recall that he said,
	"I am forecasting growth of 1.25 per cent in 2010".
	He went on to say:
	"From 2011, I am forecasting that the economy will continue to recover, with growth of 3.5 per cent from then on".
	He then used an odd expression. He said:
	"To account for the impact of the global shock, I have further adjusted trend output—the productive potential of the economy. But in future years, the economy will recover towards a trend rate of growth of 2.75 per cent".—[Official Report, Commons, 22/4/09; cols. 239-240.]
	Given that any Budget speech is crawled over in great detail by officials and Ministers, this strikes me a very odd passage that illustrates serious confusion between growth in aggregate demand and growth in productive potential. The forecast may turn out to be right as regards what happens to aggregate demand, not least because of all the measures that are being taken on quantitative easing.
	What will be difficult to deal with in managing the economy now and in the immediate future is what has happened to productive potential. The Government have said that it has been growing steadily at 2.75 per cent to 3 per cent. This is what the Treasury has said for the past 30 to 40 years. However, there has been a very serious, once-and-for-all drop in productive potential, not least of the City of London, on which we are far more dependent than is the case with other countries and their financial sectors. Perhaps the Minister will comment on this. The loss of productive potential as a result of the recession that we face makes it very difficult to balance what ought to be done about the level of aggregate demand in relation to productive potential, and reinforces my view that the action on monetary policy taken by the Government is likely to result in a sudden increase in inflation after a period when it is comparatively quiet. The situation is worrying; we will have to see how it works out. The overall situation seems to be recovering slightly. However, the difficulty of managing the economy in the next couple of years will be very great.

Lord Marlesford: My Lords, the Economist this week described what has happened as,
	"the biggest economic calamity in 80 years"—
	and so it is. At such a time, it is obvious that our country needs real leadership; that is, leadership with strength, competence, integrity and vision. Sadly, since Mr Brown moved into Downing Street, there has been remarkably little of any of those. The Prime Minister needs strength to face the facts. He spent months denying that there was a problem. Fuelled by high-octane hubris, he then claimed that Britain was leading the world. Shortly afterwards, he repeatedly claimed that Britain was saving the world. Until very recently, he insisted that public spending is continuing to rise. It is not; it cannot and it should not.
	Funding public spending is one of the great problems that we face. Our present levels of spending are based on massive borrowing, which will amount to more than 100 per cent of GDP over the next four years. Several of my noble friends have mentioned the VAT cuts. What the Government failed to realise when they made their decision to spend £12 billion on cutting VAT was the opportunity cost. You can do different things with the same money. If I had wished to spend the equivalent of that tax reduction, I would have spent the extra money on defence and on the National Health Service. That would have given a much greater stimulus to the economy than merely putting it in the hands of domestic shopkeepers who are selling VAT-taxable goods that are largely imported, particularly in the sectors of electronics, white goods and motor cars, nearly all of which are imported—and, of course, food is not subject to VAT.
	Now we are faced, on the latest estimate, with a fall in GDP this year of 4.5 per cent. The noble Lord, Lord Myners, who I am sorry to see is not in his place at the moment, indicated that he thinks that the recession may be coming to an end. My worry is that we may have got to the bottom but we may well spend a long time bumping along the bottom, which is a very uncomfortable place to be.
	Unemployment has already reached 2.4 million and is rising, and we have to remember that it is the direction rather than the level of unemployment that has an impact on economic activity. When the level of unemployment rises, those without work feel little prospect of getting jobs, and those still in jobs are worried about joining the dole queue. When unemployment starts to fall, hope is restored and anxiety is diminished, but consumer demand is likely to be very fragile until unemployment turns.
	Let us look at employment. The great boom in jobs has been in the public sector, which now employs no less than 5.8 million to 6 million people, or about one in five of the working population. That is not entirely surprising because, with the help of Brussels, over the past 12 years we have seen a deluge of new rules and regulations, many of which have been gold-plated by our Civil Service, and the creation of endless new quangos and inspectorates. Of course, several people have referred to the Finance Bill as the sort of thing that causes extra unemployment. I hope that when my honourable friend Mr George Osborne becomes Chancellor, his target will be to cut as many pages out of the financial legislation as this Government have put into it.
	By contrast, I remind the Minister that manufacturing in the United Kingdom now accounts for only 13 per cent of GDP. Mr Ed Miliband is trying to reduce it more by insisting that a significant proportion of our energy should be generated from wind power, which is no greener than nuclear power but less reliable and twice the cost. That is the way, as the Prime Minister might put it, to price British workers out of British jobs.
	We were challenged a few moments ago by a most distinguished former Minister about the scope for spending cuts. Perhaps I may give an example which I mentioned last week. Now that the new Home Secretary has announced that ID cards should be voluntary, there is no possible excuse for setting up a new ID card system with its own database. We have a perfectly good voluntary passport system with its own database, so we could abandon ID cards in favour of passports and that would save hundreds of millions of pounds. There are plenty more ideas where that came from but I do not have time to give them now.
	Finally, we come to the top tax rate of 40 per cent, which has survived for 20 years and, I believe, has played a real role in giving the City of London the opportunity to become one of the world's great financial centres. The noble Lord, Lord Sheldon, particularly singled out this rate of tax but I am reminded that the House of Commons, for the only time ever, had to be suspended in disorder during a Budget speech, such was the rage of the Labour Party when my noble friend Lord Lawson, then Nigel Lawson MP, introduced that rate in 1988. Interestingly, the Labour Party subsequently felt that it had to give an undertaking in three successive election manifestos that it would not raise the top rate above 40 per cent. Of course, it has now broken that promise. I wonder whether, in its next manifesto, it will guarantee not to raise income tax above 50 per cent.
	It was very interesting to hear the noble Lord, Lord Sheldon, because I remembered that he and the noble Lord, Lord Barnett, were the two acolytes of one of our most distinguished—in some respects, at any rate—former Chancellors, the noble Lord, Lord Healey. The noble Lord, Lord Sheldon, was Financial Secretary from 1975 to 1979; the noble Lord, Lord Barnett, was Chief Secretary from 1974 to 1979 and the noble Lord, Lord Healey, was Chancellor from 1974 to 1979. When the noble Lord, Lord Sheldon, was speaking, I almost wondered whether I could hear the noble Lord, Lord Healey, squeezing his orange juice.
	When I last spoke—in our economic debate on 7 May—I raised points on credit card debt. I pointed out that in the UK alone, the debt on which interest was being paid was well over £40 billion. As the interest rates on credit card debt are very high indeed, I suggested that much of that debt could prove to be toxic. I then made some suggestions about what the Government should do to prevent excessive exuberance in the use of credit cards. It is perhaps no coincidence that, last Wednesday, American Express announced that it had stopped its pension contributions to its 60,000 worldwide employees, which includes its 6,000 UK staff. Frankly, stopping paying your staff is hardly an indicator of financial viability. I suspect that the toxicity lurking in the unpaid credit card debt, which is therefore subject to interest, could explode into a fresh drama in the financial world. Is the Minister able to say whether HMG are more relaxed than I am at this prospect?
	Today I received the Minister's letter dated 14 July, for which I thank him, in which he referred to the consumer White Paper published on 2 July which set out proposals to improve protections for credit card borrowers. Although I am grateful for his letter, I wish I had not had to wait 10 weeks for it and indeed that I had received it earlier than the day of our debate. It would seem from the White Paper, which I welcome, that the Government are now minded to move along some of the lines I suggested. Perhaps I should congratulate the Government on reading Hansard for 7 May. However, the White Paper does not deal with all my points, especially two crucial ones. I would therefore very briefly like to refer to my original proposals.
	First, credit card companies should be required to do due diligence before issuing a card. That would include checking on what other cards an applicant has, which means a central record of credit card systems, as implied in the White Paper. Perhaps that will come. Secondly, young people should not be allowed more than one credit card. I do not know the Government's view of that. Thirdly, the balances on all credit cards should be cleared at regular intervals, and failure to do so should result in suspension of further credit. That appears to be signposted in the White Paper. Fourthly—and most importantly because it would avoid the Government getting involved in supervision of any of this—a credit card debtor who could show that his credit card company had failed to follow the rules would not have to repay the debt. That fourth proposal would be a real incentive for the credit card companies to, as the jargon has it, put their house in order. Perhaps the Minister would comment on that.
	I have one final point. If the Prime Minister were prepared to face reality, he would tell the British people that under his watch he allowed a huge and unsustainable level of consumer credit. The figure in the White Paper is £1.4 trillion, the vast majority of which is mortgages but there is £230 billion of non-mortgage debt of which the credit card debt is put at £53 billion in the White Paper.
	The Prime Minister should also emphasise that to prevent total collapse he has had to mutualise much of the debt; that is transfer it to all to UK taxpayers. That is £493 billion just for the four banks that would otherwise have gone bust. In addition, Mr Brown has allowed a rapid growth of public spending to raise the need for public borrowing well above what may be possible to finance at anything like present interest rates. A number of my noble friends have referred to the potential crisis in funding the national debt.
	The British people face years of austerity under whichever party is in power. The financial competence of my honourable friend George Osborne is well illustrated by his decision and the detailed plans in his policy White Paper on sound banking, which was published today, to transfer ultimate control over prudential supervision of the financial sector from the FSA to the Bank of England. I wonder how long it will be before Mr Brown has the confidence to ask the British electorate whether it feels that his experience—in other words, his track record—fits him to be the best steward of this situation or whether it might prefer a young and vigorous Conservative Government to pick up the pieces. It would at least start with a clean sheet, as have the Obama Administration in the United States.

Lord Naseby: My Lords, I declare an interest as chairman of Invesco Recovery Trust 2011, quite an apt title for this debate. I would like to be associated with the speeches made by my noble friends Lord Lang, Lord MacGregor and Lord Forsyth. I shall not cover the ground that they have already covered.
	I want to highlight three things. The first is savings, which I hold dear. They are the neglected vital ingredient for a successful society. Long ago, when I read economics at Cambridge, Keynesian philosophy was drummed into me. It is basically that savings equal investment and once those savings are made they flow through to good investment. Today, we have a savings ratio of just under 3 per cent. It should be nearer 8 per cent or 10 per cent to be the least bit successful. The only incentive to make anybody save at the moment is the fear of unemployment or the recession. As one looks through the Bill, there are no incentives for savings. There is nothing to encourage the family unit that is in employment to save or anything about looking to see whether the tax on dividends should be reduced to improve the return on equities and thereby improve the profitability or viability of pension funds. There is nothing about inheritance tax. Why is it that over half the countries in the rest of European have already got rid of inheritance tax? It is because they know that inheritance tax is a tax on the family and means families' well earned lifetime savings being double taxed. There is nothing in the Bill about real safety for personal or family savings. There ought to be a flat rate of £100,000 or something of that order.
	I said that I would say nothing about savings, but I declare an interest as a trustee of the parliamentary pension fund and remind noble Lords that today the average pension of a former Member of Parliament is £16,160. That is hardly gold-plated, as most of the press seem to think.

Lord Higgins: I do not believe it, my Lords.

Lord Naseby: My Lords, my noble friend says that he does not believe it. Those are the facts, and the trouble is that there are people in the press who do not believe it either. Presumably, my noble friend joins them, but those are the figures in the annual report so he will have to accept them.

Lord Higgins: My Lords, the reason I expressed surprise is that it seems to me that the figure is likely to be much lower than that. I served for 33 years in the Commons and bought eight additional years; even so, my pension is barely the amount my noble friend said, and I must be way above the average.

Lord Naseby: My Lords, my noble friend's calculations are incorrect, and I draw his attention to the annual report, which he was sent and should have read. He clearly has not done so yet, so I shall send him another copy.
	The second thing I want to raise is tax and incentives. I do not want to be too hard on the Government, but they really are the Government who know how to tax. Never have a Government managed to tax the way the Prime Minister Gordon Brown learnt to tax when he was Chancellor. It all started with the £5 billion tax on pension funds. That was the killer blow for defined benefit pensions. Even in last week's press we were told that we will pay £20,000 in tax to contribute to care homes—not ours but someone else's; there is no guarantee that that £20,000 tax on your pension will provide one for you. In the past few days, we have had all sorts of wonderful suggestions for new green taxes on this, that and the other, which frankly are badly thought through.
	I turn for a few moments to our present predicament. I re-emphasise that the Prime Minister's strategy, which was geared to ending boom and bust in the trade cycle and financed by borrowing without the means of repaying, has failed. It always will fail, and it was always destined to fail. Now we face the full horror of massive debt. The first rebuilding plank—I hope the Minister will cover this when he replies—is to have a credible spending review now, not at some time in the future when everything is allegedly in position. Now is the time to do it. If it is not done, and if there is to be a delay of six or nine months, overseas creditors, as sure as day follows night, will depart and sterling will fall. Other noble Lords have already made that point. Total government spending in 1993-94 was £283 billion. Today, it is £623 billion. If you allow for inflation, which is perfectly fair, it is £404 billion. That is almost £200 billion of extra public expenditure. Perhaps it is not all wasted, but a huge amount is.
	A number of my noble friends know that I am not really a financial man but a marketing man by profession. We in the marketing world learnt long ago that you build on success. Where are the incentives in this Finance Bill to help to rebuild our nation's successes and to encourage entrepreneurship? There is none. The VCT and EIS schemes were two pretty good schemes to encourage private investors, but they have been removed in favour of a flat-rate capital gains charge. Nor is there anything in the Finance Bill to encourage the pharmaceutical industry, advanced electronics, engineering developments, architecture, entertainment, the law or advertising—all successful industries in this country.
	Even more important is our biggest industry, the financial services, which is in absolute turmoil at the moment. Back in 1980, the industry accounted for 18 per cent of our value-added measure of GDP. In 2007, it had risen to 32 per cent. How are we going to sustain and rebuild faith in that largest of our industries? We have the expertise in that industry and a lot of advantages; we have a free exchange rate and good lawyers and good financiers who are experienced across all these areas. That creates a unique advantage for this country that we cannot and should not throw away.
	My final point relates to a particular aspect of the industry: the banking system at the moment. Higher banking reserve ratios are clearly being required that will diminish the return on equity unless the return on assets increases. An increased return on assets means that the users of the banking services need to pay more, which in turn is likely to depress the general recovery.
	Of course, the banks' return on equity can fall, but if they have to increase their reserve ratios and fund some sort of future contingency fund, they will act as they see fit and where they see profits. We know that the banks at the moment are determined to reduce their risk and to lend only where it is highly profitable. That is not what the economy needs, but it is inevitable unless the authorities realise that their current actions are making the situation worse. The failings of the past regulatory system do not need to be solved overnight. If we need higher reserve ratios they do not need to be installed immediately. But the immediate application of higher reserve ratio requirements that took place last year significantly contributed to the near-collapse of the banking system. Unless the Government understand that, our recovery will be delayed even further.

Lord Northbrook: My Lords, I always start by welcoming positive items in the Budget. This year, I give praise for the increase in first-year capital allowances, the deferral of business rate payments, the strategic investment fund provided that it is managed in a sensible fashion and the car scrappage scheme. I also warmly welcome the increase in ISA limits. They are all small beer in the scheme of things, but they are still welcome. My speech will focus on the economic background to the Finance Bill. Then I will look at one of the main tax-raising measures. Finally, I will move on to discuss once again the excellent Economic Affairs Committee report issues.
	The 2009 Budget was delivered against the background of the Budget deficit as a share of the economy both this fiscal year and the next, being the largest since World War II. This year alone the Government will borrow a breathtaking £175 billion, representing 12.4 per cent of GDP. There has also been the worst fall in national output since 1945 and the fastest rise in unemployment in our history. In his opening remarks, the Minister sounded rather complacent. He said that output was stabilising, that public finances would be stabilised for the future and that we would be living within our means. Most worrying is the level of public borrowing. Already this year the Government have borrowed £30 billion. According to June figures, total outstanding government debt has risen to £775 billion, which is no less than £150 billion more than one year ago and equal to 55 per cent of UK GDP.
	According to independent forecasters, the latest highest forecast for the debt figure this year is £202 billion, which is already a 15 per cent increase over the Budget forecast of the £175 billion which has already been mentioned. In May, the rating agency, Standard & Poor's, warned that soaring UK public debt levels had led it to put Britain's credit rating on notice that it could be downgraded. Standard & Poor's said that the UK's triple-A rating was at risk without a credible plan to put its debts on a "secure downward trajectory".
	Judging by the article in the Sunday Times even the Minister may be getting disillusioned and perhaps relying on divine intervention to help out. What are the Government planning to do about the debt problem to rein in spending? The answer is that they plan to do very little in the short term. According to table A1 in the Red Book the impact of the Budget for 2009-10 is to increase net index spending by £5 billion. In 2010-11, there will be little change to net Exchequer spending and in 2011-12, there will be a decrease of £5 billion. The Table A1 figures are made on very optimistic assumptions for economic recovery. GDP growth is assumed at 1 per cent for 2010, which may be achievable, but the 2011 forecast of 3.5 per cent still looks very optimistic. If the growth figures are not achieved, and the Treasury Committee in its report on the Budget is particularly cautious on the Chancellor's 2011 forecast, the debt situation will be much worse. As my noble friend Lord Naseby stated, we need a spending review, and we need it now.
	One of the main tax-raising measures in the Budget is the increase in the top rate of income tax to 50 per cent from 2010-11. The Pre-Budget Report last November had originally proposed a new top rate of 45 per cent a year later. The Institute for Fiscal Studies, commenting on the top rate of the original 45 per cent plan, argued strongly that it will cost the Exchequer rather than raise money as it will encourage avoidance schemes and persuade many high earners to leave the country for a lower tax regime. Anatole Kaletsky in the Times of 27 April took the same view, saying it was,
	"likely to be self-defeating, or at best utterly futile".
	He went on:
	"Even in the unlikely event that Mr Darling's pre-election tax gesture did manage to raise the odd billion, thesesums would be far too small to have any impact on public borrowing projections ... the decision to rush forward this reform amidst a recession will do serious damage to the economy and thepublic finances. Hopes of quick improvement in UKeconomic conditions assumed by Treasury forecasts rely more than ever on maintaining the City's role as the dominant centre of global financial and business services".
	The Financial Services Global Competitiveness Group, setup by the Treasury, produced a report in May, on the very day of our last economic debate which the Minister did his best to keep away from us. One of its important conclusions was that,
	"maintaining a stable, sustainable and competitive tax system is important for ensuring that business and financial centres can continue to provide an attractive location for international financial institutions".
	Can I ask the Minister how that rock solid report squares up with the shifting sands of a top rate of tax changing in the PBR from 40 to 45 per cent for individuals which then only a few months later in the Budget goes up to 50 per cent? Or how the extra tax on non-domiciles is in line with this report? As Anatole Kaletsky pointedout, the Budget Red Book says that the financial sector provided 25 per cent of the £47 billion of Britain's total corporation tax revenues before the recession, plus a
	"significant proportion of income tax and national insurance receipts".
	But these receipts are expected to decline by £25 billion during this financial year. That is more than half of the total decline expected in tax revenues as a result of the recession. Overall, the new higher rate of tax seems to be deliberately designed to stop the UK's financial and service sectors returning to the predominance they enjoyed. Can the Minister tell the House if this is the Government's deliberate intention?
	I now move on to the Economic Affairs Committee report. The first issue tackled is the foreign profits reform package. This is a very complicated area and I am no tax expert, but I quote from a Deloitte Budget commentary:
	"One of the most competitive features of the UK tax system in the past has been the lack of any generallimitations on the tax deductibility of interest".
	There is now proposed a worldwide debt cap on tax deductibility of interest. This, according to the shadow Financial Secretary Mark Hoban in another place will mean that there is,
	"a risk of incentivising debt at the expense of international businesses that use their own resources to fund inward investment".—[Official Report, Commons, 8/8/09; col. 1073.]
	Will the Minister say whether the Government will take on board the recommendations of the Economic Affairs Committee and delay implementation of the worldwide debt cap until sufficient consultation has been undertaken? Also, can the Government give assurances that they will not have to resort to retrospective tax legislation in future as a result of the repeal of Section 765?
	I now turn to the second major issue covered—REITs. I welcomed their introduction in 2007 as a means of enabling greater efficiency and flexibility in the UK property investment market. However, to date, no residential property REIT has been established. The Economic Affairs Committee concluded that,
	"officials should take a more flexible and responsive approach. HMT and HMRC should look again at proposals by representative bodies especially for the residential sector. The official approach seems complacent and unduly cautious and there could be reconsideration of, for example, the total entry charge, now that there is more than two years' experience of REITs' operations'.
	The accountants Deloitte also agreed that not enough had been done to help REITs. Does the Minister agree that reforms to REITs did not go far enough?
	I turn now to the final topic the committee considered—the pension special annual allowance. The committee reported that,
	"making a significant change so soon after the major redesign of the whole system significantly detracted"—
	as my noble friend Lord Forsyth said—
	"from the simplicity, consistency and certainty which are hallmarks of a good tax system. The undermining of the regime may very well set a precedent and sap confidence. Given the potential effect on savings we found this regrettable".
	In summary, the Budget does little to give assurance that the Government are on top of a parlous economic situation. We may be over the worse of the banking crisis but serious economic problems remain and the major tax-raising measure is being introduced more for political short-term reasons than for sound long-term planning. This is not the way to ensure economic recovery.

Lord Newby: My Lords, I thank my noble friend Lord Vallance and his colleagues on the Economic Affairs Select Committee sub-committee for their report on the Finance Bill. I had the dubious pleasure of serving on the sub-committee in the first two years of its existence at a time when the then Chancellor did everything he could to starve it of information and to try to kill it off. I am pleased to see that it is now such a robust and thorough plant, if a plant can be thorough.
	A number of themes have run through every report the sub-committee has produced; the question of consultation has been one of them. It is fair to say that over the seven years since the sub-committee was established, the track record of the Treasury has improved in that there has become a realisation, I suspect, that you cannot get away with no consultation on changes without at least there being public criticism of it, which was not the norm even seven years ago, or at least not to the same extent. We have heard today and can see from the report that there are some areas where there has been a lack of consultation this year for no apparent reason; the clause relating to accounting officers and the naming and shaming clauses have been mentioned. But the number of areas on which there has been no consultation appears to be reducing year and year, and it is an important function of the sub-committee to keep the pressure on in that area.
	The other issue of contention which the sub-committee has discussed is that of the taxation of pensions and the reduction of the high-rate relief for income earners of more than £150,000 a year. There has been much discussion of whether this is the thin end of the wedge. As noble Lords will know, we on these Benches represent the wedge. We have been advocating an end to higher-rate tax relief on pensions tout court for some considerable time and one of our main objections to the Government's proposals is that they do not go far enough. Of course, being this Government, they have introduced the measure in the most complicated way and with the maximum amount of legislation, which, in most respects, will serve little purpose.
	On the Finance Bill itself, we cannot obviously amend it and it is not usual to discuss minor aspects of it. However, I would like to raise one aspect, very briefly, because it is unfinished business from the Commons end. This relates to the slightly arcane issue of the air passenger duty and the way that it affects different territories. Noble Lords may be aware that the Government have introduced a banding system for the air passenger duty. The costs incurred by passengers depend on the distance that they travel from London. Unfortunately, the calculations are based on the situation of capital cities, and a major anomaly has arisen with regard to the Caribbean, which is in a band that incurs a higher charge than flights to the US even though, if you are travelling to Alaska or Hawaii, you are travelling considerably further than to the Caribbean.
	That is a major concern in the Caribbean, where people feel that they are at a disadvantage with this tax on travel compared with the US at a time when the tourist trade is in severe difficulties and when some of their existing and traditional industries, particularly agricultural ones such as bananas and sugar, have already largely disappeared. These small countries, with which we have close links, have increasingly become a source of drugs as a result of previous economic failures. There is a fear that this change will exacerbate that problem as well as causing significant hardship for visiting friends and relatives travelling to the Caribbean.
	On Report in another place, the Exchequer Secretary said that the matter was not closed and that she had,
	"asked my officials to consider the matter further".—[Official Report, Commons, 8/7/09; col. 1016.]
	Has any further such consideration yet been given? When might we expect to hear the outcome of those deliberations?
	At the time of the Budget we were preoccupied in large measure by the costs that the Government were incurring in propping up the banks, and indeed by the situation in the banking sector as a whole. It has been striking today that that has not been a major feature of the debate. Rereading the Financial Statement and Budget Report, though, one is reminded of the sheer scale of government investment in the banks, whether through improving liquidity or through recapitalising the two now largely nationalised banks. I have a couple of questions for the Minister about the quid pro quo for that recapitalisation.
	Shortly before the Budget, both RBS and the Lloyds Banking Group signed a lending commitment agreement with the Government. The agreement has been published on the Treasury website only within the past couple of days, so I have not had the chance before today to ask the Minister about it. There are two specific questions, one of which we have already partially discussed. At the time of the banking White Paper Statement, I asked why the Government were requiring the banks to lend at 90 per cent loan-to-value ratios. The noble Lord, Lord Myners, said that,
	"we have not given any instruction to the RBS about making loans in respect of 90 per cent of loan to value. We leave that matter in the hands of those at the Royal Bank of Scotland".—[Official Report, 9/7/09; col. 776.]
	However, the lending agreement, which is now available on the Treasury website, says that:
	"the Participating Institution will ensure that ... a reasonably competitive range of residential mortgage products are available for residential mortgage applicants ... up to at least 90 per cent loan-to-value".
	In February, why did the Government think that it was appropriate for the nationalised banks to be lending at more than 90 per cent loan to value at a time when property prices were falling and, indeed, may continue to fall? Is that not exactly the kind of risk that we were trying to avoid?
	My second question is this. The agreement explains the amount of additional lending that the bank has to undertake but, in respect of the specific components of lending to SMEs, mid-corporates and large corporates, the phrase,
	"its lending to Large Corporates will be at least *** above the amount shown in the baseline budget",
	has asterisks in it. Why have the Government redacted—to use that horrible word—the subtotals of the additional lending that the nationalised banks are required to give to SMEs and others? Surely it is in the public interest that we should know.
	The dominant issue, which the Budget began to address but which has become more prominent since then, if that is possible, is the dismal state of the public finances. The record levels of borrowing which the Government are now undertaking have increasingly been seen to be structural and not cyclical—or indeed the famine following the feast over which the Chancellor presided—even to such an extent that we were running up significant deficits even when growth was strong and tax receipts were buoyant.
	It is generally believed that the Budget's claims for growth for next year and the Government's plans more generally for the public finances are too optimistic. It is now clear that there will need to be a tight squeeze on public expenditure over many years and, in all probability, increases in taxation as well. We on these Benches agreed with the noble Lord, Lord Barnett—and the Government have done it—that we needed a fiscal stimulus this year but that, in coming years, that stimulus could not be maintained. We did not agree that the temporary VAT reduction was the most appropriate way to do it, because it leads to a short-term increase in consumption, whereas an equivalent amount spent on investment could have led to long-term benefits to the economy.
	However, there will undoubtedly have to be reductions in public expenditure, about which the Government seem largely to be in denial. The Prime Minister explained in a recent interview with Nick Robinson on a train that public expenditure cuts could be adequately dealt with by asset sales and efficiency savings, which is clearly ridiculous. While he is saying that about expenditure on the one hand, Cabinet Ministers are, on the other, almost lining up to say that, whatever happens, their areas will not be affected—we have had that in education; we have had it in health; and now the noble Lord, Lord Mandelson, who I had not realised until today was Defence Secretary along with his many other titles, has said that defence, too, will be ring-fenced. We therefore find ourselves with a Government who are increasingly out of touch with reality on public expenditure. Similar pressures are on the Conservative Opposition, where an increasing number of areas are already being ring-fenced. We all know that that is not realistic.
	We have said that we need to begin to identify areas where there will have to be real cuts of whole programmes. We have identified a number of them, from small ones such as the child trust funds to larger ones such as a major review of the cost of public sector pensions.
	I am sure that whichever incoming Government we find ourselves with will have to face the question of how to make better use of the level of public expenditure that we can afford, whatever it is. One of the annoying aspects of the huge increase in public expenditure in recent years is that it has been accompanied by a fall in productivity in the public sector. This area will simply have to be addressed. There are major problems in doing this, of course, of which culture within the Civil Service is possibly the most significant. There is no culture of looking to adopt best practice from elsewhere; there is no culture of continuous change; and, indeed, during this period of falling productivity, increasing levels of bonuses have been paid almost across the board to senior civil servants. That will have to change. We on these Benches welcome the initiative being taken by the noble Lord, Lord Sainsbury, and Sir Michael Bichard in this area, and we are particularly pleased that they are doing it on a non-partisan basis.
	This will be the last normal Finance Bill of this Government which we will consider in your Lordships' House. It represents the end of an era in many ways. It will almost certainly be the last Finance Bill for many years to show a fiscal stimulus rather than a fiscal tightening and will, in that respect at least, represent a watershed. As the noble Lord, Lord Forsyth, mentioned, at the end of his sojourn on the government Benches the Minister is considering becoming a student of comparative religion. He has some advantages in this respect in that he already knows something about the subject. He embodies the principle that the Labour Party owes more to Methodism than it does to Marx. As he contemplates his future, I hope that he does not behave like a sheep and follow the other goats out of the Government. The current trend is doing nothing for the reputation of goats.

Baroness Noakes: My Lords, several weeks ago we provisionally scheduled this debate on the Finance Bill for a quiet afternoon on the day before the House rises for the Recess. As it turns out, we have been overtaken by other business and find ourselves concluding our debate at nearly 10 o'clock in the evening. This is partly because the Government have devoted much of today to discussion on one of the most ill conceived Bills of recent times. The only purpose of the Parliamentary Standards Bill is to allow the Prime Minister to boast about reforming Parliament. However, I predict that the history books will not record this Administration as a reforming one. Rather, they will record a period of government characterised by disastrous economic policies, an inability to carry through any meaningful public service reform and, of course, the most disastrous loss of trust in politics of any Government in the modern age.
	The Finance Bill is emblematic of this Government. It arises from a Budget that revealed in gory detail what 12 years of Labour Party rule does to our economy. The Bill tinkers with various bits of the tax system, achieves little and in some places does actual harm, but it does nothing to deal with the problems that people face in their everyday lives.
	I am delighted that so many of my noble friends have chosen to speak today and have stayed into the evening. Led by the comprehensive critique of my noble friend Lord Lang, my noble friends have delivered a damning verdict on this Government's economic policies and on this Finance Bill. I endorse what they have said.
	I pay tribute to the work of the Economic Affairs Committee on the Finance Bill, led by the noble Lord, Lord Vallance. I remind the Minister that this is one report from a committee of your Lordships' House to which the only response that the Government make is in the related debate, such as the one that we are having this evening. I am not sure that the Minister has so far given a comprehensive response. I hope that he will reflect further on that before he winds up this evening. My noble friend Lord Forsyth and the noble Lord, Lord Barnett, gave him a couple of steers on areas where one or two outstanding points remain.
	As the Minister is aware, your Lordships' House is not able to amend the Finance Bill. When a Finance Bill contains things that we think are foolish or wrong, we can do little but express our regret. If my party forms the next Government, it remains a clear part of our policy that we will implement reforms developed by my noble friend Lord Forsyth and my noble and learned friend Lord Howe of Aberavon. First, we will publish draft tax clauses after the Pre-Budget Report and subject them to proper scrutiny by way of a committee that would, importantly, include Members of your Lordships' House. Secondly, we will create an office of tax simplification, which will be tasked with the creation and maintenance of a system of tax that eschews complexity.
	This is not the longest Finance Bill that we have considered in the past 12 years, but it is full of complexity. There are 67 pages of clauses that cover 380 pages of schedules—over 80 per cent—which is where all the complex stuff is hidden. We can see a wearisome pattern of tax incentives surrounded by complex legislation to prevent incentives from becoming a tool of tax avoidance, followed by amending legislation to counter more deemed avoidance. The habit of complexity is toxic. It damages our competitiveness. That is the clear view of the Confederation of British Industry, the Institute of Chartered Accountants and many others. A major shift in attitude and approach is needed if we are to break out of this soul- and value-destroying process of tax law.
	The Finance Bill lays the ground for the 50 per cent rate of income tax. Few outside the Treasury believe that it will raise the £2.4 billion of revenue that the Treasury projects. It creates top rates that are about as bad as they get on a global comparison. It might have temporarily raised the spirits of those dejected souls on the Back Benches of the Labour Party in another place, but even they must see that it is bad for Britain's competitiveness and deadly for the motivation of individuals. The Bill does not include the 0.5 per cent increase in national insurance contributions from next year as announced in the Pre-Budget Report. That is a tax on jobs and a tax on the many and it will not help our economy to climb out of the recession that the Government's own policies have exacerbated. There is probably a small cheer from business over the decision not to raise the small company tax rate, as was threatened, and not to tax foreign dividends, but the debt cap proposals, as has been pointed out this evening, leave a major uncertainty overhanging the attractiveness of the UK as a location for business groups.
	My noble friends Lord MacGregor, Lord Forsyth and Lady O'Cathain concentrated their speeches on the pension provisions of the Finance Bill. The changes betray the certainty promised by the pension simplification of a couple of years ago. The changes are unfair for the reasons given by my noble friends. They will contribute to the decline in private sector pension provision and discourage savings. My noble friend Lord Naseby also referred to the lack of incentives for savings. The epitaph of this Government could well be that they completely destroyed the pension aspirations of a generation.
	The Bill has other follies. I agree with my noble friends Lord Higgins and Lord Marlesford that the VAT reduction was not a sensible policy, but it is stupid to ignore the clear advice from the retail sector that absolutely the worst time to increase the VAT rate back again is 1 January, which is what this Finance Bill contains. There are ill conceived revisions about finance directors signing for tax accounting. Those will add considerable cost and yield little. There is an extraordinary attack on the bingo industry, which will likely be taxed out of existence. None of that adds up to a coherent set of policies, but we long ago gave up on searching for coherence in this Government.
	I shall now address some remarks to the economy. This Finance Bill is derived from the Budget in which the Chancellor was forced to own up to the scale of the problems facing our economy. Many believe that he is still hiding behind unrealistic assumptions. Principal among those are the growth assumptions. As my noble friend Lord Higgins reminded us, the Budget said that this year's growth would be a negative figure of 3.5 per cent but that there would be a bounce back to 1.5 per cent positive next year followed by a 3.5 per cent positive in 2011. Since the Budget, data and forecasts have cast doubt on those figures. The ONS said that the first quarter decline was the highest ever recorded, at 2.4 per cent. The IMF's recent forecast for this year is negative 4.2 per cent and this morning's ITEM Club forecast is even worse at 4.5 per cent. The independent forecasters summarised in the Treasury's own booklet are almost all more negative than the Chancellor in the figures for both this year and next and, as my noble friend Lord Marlesford said, the timing of a recovery is far from certain. Back in 1991, the current Prime Minister said of the then Prime Minister:
	"He is seeing things that we know aren't there and living his whole life as if they were there—a textbook case of an otherwise sane man hallucinating a whole economic recovery".
	Well, the boot is on the other foot now.
	The danger is that the Prime Minister and the Chancellor are so set on their own forecasts—which themselves produce unprecedented levels of deficit, borrowing and debt—that they have no understanding of the possibility that they are understating the scale of the problem. My noble friend Lord Northbrook reminded us that if, as seems likely, the Government's trampoline growth assumptions prove to be optimistic, the deficit, borrowing and debt figures will be even worse, which will make all the more urgent the need for a credible plan to restore the public finances. The Governor of the Bank of England and the IMF, inter alios, have backed our call for a proper exit strategy. Blind optimism is not good enough.
	That is why we have been calling for a debate on the need to rein in public spending and to search not only for things that can be done better but also for those that need not be done at all, while of course protecting front-line services. I am pleased that the noble Lord, Lord Barnett, is up for this debate. However, the Government still are in stubborn denial. They say that they will not cut public spending, despite the fact that their own figures as set out in the Budget book show that in real terms the Government already plan to cut total spending by 0.7 per cent over the period 2011-14. That translates to cuts in departmental limits of 7 per cent once debt interest and benefit payments are taken out. We suspect that the Comprehensive Spending Review was cancelled only because the Prime Minister will not face up to the fiscal facts of life. I agree with my noble friend Lord Naseby that we need a Comprehensive Spending Review now.
	The Government have carried out one of the most wasteful periods of expenditure in history. The ONS has recently shown that in the decade to 2007 there was negative productivity growth of over 3 per cent in public spending. That compares with whole-economy productivity growth over the same period of around 20 per cent. The Government have no credibility when it comes to public spending.
	The Prime Minister implemented his boom-and-bust policies and brooked no criticism. We warned of the imprudence of an economy built on debt, both governmental and personal. We highlighted the constant erosion of our international competitiveness and the accumulating trade deficit as well as the increasing decline of the manufacturing sector. Now we have the result of boom and bust in terms of real-life tragedies. Unemployment is 2.4 million and still rising and young people are bearing the brunt of this. The numbers of children living in poverty had been rising even before the recession, and the Government will miss their 2010 target of halving child poverty by a country mile. Their only response is a Child Poverty Bill which is full of targets and duties but no action.
	This Finance Bill, and the Budget that preceded it, have no answers to the questions that need to be addressed. There is some marginal help for businesses but no sound foundation for a post-recession era. Pensions have been further damaged and Britain's competitiveness continues to slide. If this House had the power, we should refuse to give the Bill a Second Reading and tell the Government to come back with something better. If only.
	As the noble Lord, Lord Newby, pointed out, this is likely to be the last Finance Bill taken through all its normal stages in Parliament before the next general election. Then there will be an opportunity for voters to pass their judgment on the economic competence of the Government. That cannot come soon enough for these Benches.

Lord Myners: My Lords, this House has long respected the rights and privileges of our colleagues in another place in relation to financial matters. As a Bill of aids and supplies, it does not fall to us to debate the detail of individual clauses of the Finance Bill, or to propose amendments to it. But I am sure that your Lordships will all agree that this convention has in no way dampened today's debate, which has been fascinating, wide ranging, well informed and spirited.
	I would like to thank all noble Lords who have brought their experience and wisdom to these discussions—particularly the serried ranks of supporters who sit behind me, for whose unreserved support I express my deepest gratitude.

Noble Lords: Oh!

Lord Myners: Of course, my Lords, in the time allotted to me for this short closing speech, it would not be possible to mention every contribution made to the debate, let alone to answer all the points that have been raised. In the event that I do not answer a technical point or a question which requires a factual answer, I will ensure that I study Hansard and reply to the noble Baroness or noble Lord as appropriate.
	However, several specific issues that were raised seemed particularly pertinent and I will do my best to address them. First, the noble Lord, Lord Lang of Monkton, brought his great experience to bear in an excellent contribution to our debate. In addressing some of his points, I will refer to other Members of the House who touched on them. He reminded us of the preference for consultation. Indeed, the noble Lord, Lord Newby, noted that there had been a significant increase in the amount of consultation that was taking place, and that the number of areas on which consultation had not taken place but where it was believed that it would have been possible has been declining. I would encourage that trend and wish to see it continue. However, we have no intention at this stage of delaying the implementation of the debt cap, which was a particular point raised by the noble Lord, Lord Lang, under that heading.
	The noble Lord, Lord Lang, also raised questions about REITs. It is quite difficult to reach a judgment on the experience of REITs after such a short period of time when the commercial real estate market has been going through such significant valuation change. I say that as a former chairman of the largest REIT in the UK—indeed, the second-largest quoted property company in Europe. However, we will take account of the representations that have been made. The noble Lord, Lord Best, asked that we remain open to representations from the British Property Federation and the Royal Institution of Chartered Surveyors, and my noble friend Lord Sheldon made similar points. We certainly do not regard the REITs story as being closed. I will revert to that in a moment when I deal with some of the comments made by my noble friend Lord Best.

Baroness O'Cathain: He is not your noble friend.

Baroness Royall of Blaisdon: He is your friend the noble Lord.

Lord Myners: I do apologise, my Lords. He is a man of friendly disposition, and therefore easily described as a friend, but, by convention, the noble Lord. Ours is an open party; the noble Lord is always welcome.
	Comments were made about the reduction in VAT. I find this quite curious because, on the one hand, those who say that it will not be effective now also say that they do not want to see it revert to the original rate—particularly retailers; I had Sir Phillip Green on the telephone to me on this subject only a few days ago. The advantage of VAT was, as my noble friend Lord Sheldon said, that it is rapid, can be effectively implemented very swiftly, and is to the benefit of all members of the community. I noted that the noble Lords, Lord Marlesford and Lord Newby, and the noble Baroness, Lady Noakes, were less in agreement. I found the disagreement of the noble Baroness, Lady Noakes, somewhat odd, since the right honourable Kenneth Clarke—who has been brought in to strengthen the Conservative Front Bench in the other House to make up for its youthfulness and inexperience—said that this was absolutely the right thing to do.
	The noble Lord, Lord Lang, said that we should spell out our plans for the future and the route that we are going to take. That is precisely what we have done. We have done so by painting a projection of public sector borrowing which, as a percentage of GDP, will decline quite rapidly once we are past the worst of the world recession. In the mean time, questions were asked not only by the noble Lord, Lord Lang, but the noble Lords, Lord Forsyth and Lord Naseby, about the funding of the public sector debt. I remind noble Lords that the Government are currently borrowing at record low rates of interest, in both nominal and real terms, which seems to be inconsistent with the words of caution that we are hearing. The markets are expressing their confidence that the Government's commitment to returning to fiscal sustainability is something from which they can draw great encouragement.
	The noble Lord, Lord Lang, also gave us a number of economic statistics on productivity, investment, imports, exports and employment. I think the noble Lord, Lord Forsyth, might accuse him of cherry picking, in only giving the most positive representations. In all cases, the trends that the noble Lord, Lord Lang, highlighted are evident in almost all developed economies. This is because we are in a global recession. Of course one would expect productivity to decline. Of course you would expect the rate of export activity to decline, although in that case it is interesting to note that our balance of trade is improving dramatically as our exporters gain an increasing share of what is clearly, at the moment, a constrained market for industrial export goods. The noble Lord, Lord Lang, referred—in connection with the funding of public sector borrowing—to the fact that we would be in competition with other Governments issuing significant amounts of debt. Of course, that is because other countries are following exactly the same policy that we are. That is, that the public sector can support economic demand, activity and output during a time when private sector demand is being affected by the global recession. That is why this policy is absolutely right for our country.
	The noble Lord, Lord Lang, then raised several questions about pensions. Those were also raised by the noble Lords, Lord Forsyth and Lord Vallance, and a number of others in the House. I recognise that this is a sensitive subject and I am grateful for the interventions of the noble Lord, Lord Forsyth, on this point. I am also reminded by the noble Lord, Lord Higgins, that it is not wise to accept interventions in a speech from the Front Bench if you are intent on getting across a coherent story, which the noble Baroness, Lady Noakes, says is so important. The Government need to ensure that pension tax relief is targeted, sustainable and affordable. The changes affect only those pension savers with the highest incomes, who are comparatively better placed to make their own pension provision. It would be difficult to design and apply a rule that continued marginal rate relief for genuine pre-retirement top-ups, while excluding those who seek to abuse such a rule. If it were possible, we would have done so. Individuals can make higher contributions with the benefit of tax relief now than under certain of the pre-FA 2004 rules, when contributions were limited to the percentage of capped earnings. The noble Lords, Lord Vallance of Tummel and Lord MacGregor of Pulham Market, also observed that these were areas in which it would have been difficult to have pre-consulted.
	It was suggested by a number of noble Lords from the opposition Benches that the announcement showed that the 2006 pension simplification had been a failure, and that we were changing rules which we had set down only three years ago. The underlying structure of pension rules remains the same. The advantages that the new pension rules have brought about continue for pension schemes, and the vast majority of pension savers are unaffected by the new rules. For the vast majority of pension savers, Schedule 35 and the main 2011 measures change nothing. Even at A-Day, the Government said that pension tax relief has to be sustainable and affordable. At the upper levels of income, this is no longer the case. In particular, it has become clear that the very wealthiest of savers have disproportionately benefited from the A-Day changes. This is not affordable in the current fiscal climate. The changes that are being made affect only high-income individuals. These are the very wealthiest people in society and those who require at least tax incentives to stay.
	The anti-forestalling provisions on which noble Lords spoke extensively strike a reasonable balance between providing for fiscal neutrality, allowing the continuation of most forms of normal pension contributions and preventing undue administrative complexity. There is evidence that forestalling activity was already occurring by the morning of the Budget day, because of increasing expectations that the Government were to take action on pension tax relief. The Government do not encourage forestalling. Without such legislation, tax revenues of £2 billion were at risk. This is not the low risk suggested by the noble Lord, Lord MacGregor of Pulham Market, and, I suggest to the noble Lord, Lord Forsyth, justifies 13 pages of legislation and 52 pages of guidance. In the language of the Conservative Party, £2 billion is certainly not "chicken feed".
	The noble Lord, Lord Forsyth, treated us to a speech which showed all his signature of warmth and goodwill towards those who sit on the government Benches. It is always a pleasure when I see the noble Lord rising to his feet. My journey, as described in the Sunday Times yesterday, is encouraged by the warmth that I have come to associate with the noble Lord. He also raised questions about the anti-forestalling regime. I emphasise that it does not stop people going ahead with planning. All that the rules do is to limit the amount of subsidy provided by the Government in the form of higher-rate tax relief.
	The noble Lord, Lord Best—the friendly Lord Best—raised a number of very informed questions about REITs. I may well wish to write to the noble Lord, because I do not think that I can do justice to the breadth of his contributions in the short time available. I agree with him that the rental market is growing and is becoming more institutionalised. This will become an increasing trend in British society. More people, particularly younger people, will choose to live in rented accommodation, which is more suited to a flexible lifestyle than we in our generation aspired to. This approach to providing accommodation is to be found in many other parts of the world. People will choose to invest in other ways the money that otherwise they would have invested in property. We would like REITs to be available for residential property, and we will be working on ways in which we could see the REIT model extended to that area. I also take account of the comments of the noble Lord, Lord Northbrook, on REITs. Significant changes have been suggested to almost every aspect of the REITs regime since it was introduced, in particular to boost the prospects for residential REITs. However, it is important to note that, while the changes have no guarantee of success, each condition under the current REITs regime is there for a very good reason, in particular to prevent tax avoidance, and that any proposal to include residential property under REITs would have to take that into account.
	I should refer to the noble Lord, Lord Barnett, as "my noble friend", but it is not always evident from the questions that he asks. The noble Lord, Lord Barnett, introduced a focus on economic matters that was welcome, given that most of the contributions to which I have referred focused on a narrow group of high earners and high-rate taxpayers. I salute the noble Lord, Lord Barnett, for introducing an economic perspective that drew upon his great experience and raised the standard of our debate on the economic outlook. I will not be drawn into responding to the noble Lord's speculation about what may occur in future announcements by my right honourable friend the Chancellor of the Exchequer. However, I will reiterate that we are committed to sustainable public finances, and that we will reduce public borrowing as a percentage of GDP.
	On other issues, the noble Lord, Lord Barnett, must await the PBR. We are building on significant fiscal consolidation, announced in the last PBR, and the Budget sets out tax and spending measures that will reduce borrowing significantly by 2013-14. The noble Lord, Lord Barnett, referred also to the CBI speculation about a tax rate. The level of extra tax depends on the extent to which an individual makes additional contributions after the 2009 Budget. I cannot speak to the specific example that he gave, for which his source was the CBI.
	The noble Lord, Lord MacGregor of Pulham Market, brought a wealth of experience on pension matters, on which he is very informed after working in this area for many years. I take note of what he says about the outlook for defined benefit pensions, although I note that that observation, as the Turner report on pensions showed, is global and not confined to the UK. I note also that pensions continue to enjoy very substantial tax incentives. However, we had to do something about a situation in which 25 per cent of the tax relief going to pension contributions was for the benefit of less than 2 per cent of the population, who were the wealthiest members of the population—a situation that would be indefensible for any Government.
	The noble Lord, Lord MacGregor, also raised the old canard about the £5 billion tax reduction in 1997. The first bite at this cherry was taken by the noble Lord, Lord Lamont of Lerwick. This is conveniently forgotten by the Opposition Benches, as is the fact that it was done to finance a reduction in corporation tax that was greatly welcomed at the time by the business community and investment markets.
	I will move on. There were so many good contributions—for example, from the noble Lord, Lord Marlesford, on credit cards. His was a wonderfully anti-business, anti-liberal argument in favour of restricting the availability of credit cards. I assure the noble Lord, Lord Higgins, that if he studies Hansard from the other place, he will find a detailed discussion of the issues of retrospectivity in tax matters. We would only ever propose anything that was retrospective in response to the most heinous forms of tax avoidance, as was clearly the case with regard to certain measures that we announced in January.
	Many other points were raised in what, as I said, was an excellent debate, but I know that Members of the House are keen to move on to the next item of business. As I said, if I have failed to answer questions of detail, I shall write to noble Lords, but I hope they will agree that this is a good Finance Bill and that it is an important step forward in our journey towards a stronger, fairer and more prosperous Britain. I commend it to the House.
	Bill read a second time. Committee negatived. Standing Order 47 having been dispensed with, the Bill was read a third time and passed.

Finance Bill (EAC Report)

Copy of the report Vol I
	Copy of the report Vol II

Motion to Take Note

Moved By Lord Vallance of Tummel
	That this House takes note of the report of the Economic Affairs Committee on the Finance Bill 2009 (3rd Report, HL Paper 113).
	Motion agreed.

Parliamentary Standards Bill

Bill Main Page
	Copy of the Bill
	Explanatory Notes
	Amendments
	17th Report from Constitution Committee
	18th Report from Constitution Committee

Third Reading

Moved by Baroness Royall of Blaisdon
	That the Bill be now read a third time.
	Amendment
	 Moved by Baroness Royall of Blaisdon
	Clause 9, page 6, line 14, after "procedures" insert "or any conditions under subsection (5)(b) or (7)(c)"

Baroness Royall of Blaisdon: My Lords, when we discussed this question earlier on Report, I said, on the basis of some amendments from the noble Lord, Lord Jenkin of Roding, that I was happy to go away and consider an amendment which would make it clear that IPSA should consult when deciding what conditions it would specify for the commissioner to be able to exercise his or her powers to settle an investigation without referring it to the Standards and Privileges Committee. This amendment fulfils that commitment. Unlike the noble Lord's amendment, which was to subsection (9), this amends subsection (10) so that it reads:
	"In determining the procedures or any conditions under subsection (5)(b) or (7)(c), the IPSA must consult",
	the bodies set out in the clause—that is, the Leader of the House of Commons, the House of Commons Committee on Standards and Privileges, the commissioner and any other person the IPSA considers appropriate.
	As I explained on Report, the conditions may go beyond those which relate simply to the rectification of the error. That is another reason why we could not accept the noble Lord's amendment as it stood, but we accepted the principle that IPSA should consult on setting the conditions. I hope that the House will agree that this fulfils the commitment that I made. I beg to move.

Lord Jenkin of Roding: My Lords, I believe that the noble Baroness has been as good as her word and that we have improved this clause. I was very grateful when she indicated her acceptance of the amendments that I moved earlier today, and I consider her latest amendment to be an improvement. I think we have improved the Bill but whether we have improved it enough to make it a tolerable piece of legislation is something that I must leave to other people to judge. I do not think that it is.

Baroness Oppenheim-Barnes: My Lords, with Third Reading we now have a Bill, hatched and dispatched in a great deal of hurry, which I believe is far better than when it started out, thanks to the work of noble Lords on both sides of the House—in particular, those who involved themselves in the complexities of the legal aspects of the Bill, which had to be faced and were faced. The noble Baroness has been of great benefit to those of us who have an interest in the Bill. Her patience has been extraordinary and she has been very relaxed and amenable about the Bill.
	We have to face the fact that the Bill has been hatched and dispatched in a great hurry as we were facing, and still are facing, a crisis of confidence in the other place. They had it coming to them. I am sorry that they are depressed; I am sorry that they are having nervous breakdowns; but when I look back some 40 years to when I first went to that House, I remember we had votes every night at 10 o'clock and very much later and we had votes every morning in Standing Committees on Bills. Members of Parliament came from all the professions, from business, from industry and from trade unions and they were an adornment in that House.
	What has happened subsequently has not happened overnight but over 20 or 30 years and outside interests are now frowned on. Members bring outside expertise to the House—they have more time to pursue those interests as the House does not sit anything like as long as previously—but in the Bill we still have the provision about outside interests. I am disappointed that we still have the silly provision in Clause 8(10)(b),
	"indirect financial interest (such as a financial interest of a member of the family of the member concerned)".
	Some families are very large and it seems to me that we are expecting a great deal of them. The noble Baroness, Lady Royall, has helped me to digest the indigestible by dealing with the compliance section in regard to this far more favourably. I am very grateful to her, as I am sure are all noble Lords.

Lord Shutt of Greetland: My Lords, as we come to the end of this Bill it is perhaps appropriate to say one or two things. This has been an interesting Bill to be involved with. The circumstances are quite difficult and strange. As I said at Second Reading, it is one of those Bills that we shall somehow have to put up with. It has had a fair amount of chewing in this place and it was chewed even before it got to the other place in informal pre-legislative scrutiny.
	The word "privilege" has been raised on many occasions. Privilege is something we have in this place: we have the privilege of being asked to come here and at the moment we do not have to seek the views of electors every four or five years. I am very conscious of those who have to seek the views of the electors every four or five years. However imperfect the Bill is, it may have assisted a little those who have to seek the views of electors. I am very aware of those who have gone home, weekend after weekend, to comments about this place being a place of abundance and being asked how much of that abundance they have been able to take on themselves. If the Bill assists those outsiders who are to look at the allowances, expenses and salaries in the future, I believe that will be to the advantage of democracy in this land.

Baroness Quin: My Lords, I support the Bill. I congratulate my noble friends on the Front Bench on the marathon in which they have been involved in getting this legislation to its present state. As a member of the Constitution Committee, I would have liked more time to consider the Bill, although I did not support the amendment in the name of the noble Lord, Lord Norton, which I believe would unfortunately have had the effect of kicking it into the long grass until October. Criticisms about parliamentary recesses and nothing being seen to happen for three months would have put us in a very difficult position.
	My main purpose is to make a brief intervention, which follows from what the noble Baroness, Lady Oppenheim-Barnes, said. During this debate, a number of noble Lords, particularly the noble Lords, Lord Crickhowell and Lord MacGregor of Pulham Market, stressed that the other place is increasingly dominated by people without outside experience. I am not sure that that is the case. I have recently looked at the House of Commons research papers on the background of Members of another place, and there are many MPs with a range of outside experiences. We should not confuse outside experience before coming into the other place with the debate about whether Members of the other place should be doing other jobs while they are full-time Members of Parliament. That is a different debate, and we do not want to get the two things confused.
	It was said that the other place is finding it difficult to find people to fill the law offices. The figures that I have seen show that while the number of barristers has reduced over the past 15 years, the number of solicitors has increased. There are 70 or 80 Members of the other place with a legal background, which does not seem to be too small a pool from which to draw law officers in future. It is true that there are fewer manual workers and fewer miners in the other place than there were, but that simply reflects society, as does the increased number of women, and that makes for a better reflection of society than in the past.
	Outside experience before coming into Parliament is important, and the figures show that there are more people who were politicians or political researchers in the other place than there used to be. However, the figures need to be looked at with some caution because they merely record the jobs that people had immediately prior to entering Parliament, not the jobs that they may have had prior to that. In those circumstances, people who have been MEPs are recorded in the figures as being politicians or political researchers, whereas most of us had other jobs prior to becoming Members of the European Parliament.
	It frequently seems that when we talk about professional politicians, it is always done with a sneer. We would not say professional doctors, professional accountants or professional any other profession with a sneer, and we ought to be prepared to defend the idea of professional politics. Professionalism in politics is important. We all know that we keep on learning in the political forums in which we are active over many years. I support the provisions of the Bill, but I would like to think that the Government and the Opposition will be prepared to defend the profession of politics and the role of politicians, which are so important for the future of democracy in our country.

Lord Norton of Louth: My Lords, I shall speak briefly. There is a good article in the Times today that makes the case for public policy being evidence-based. It is clearly a very powerful case. My concern is that the Bill would not fall into that category. It has been justified by the argument that the public are outraged and demand action. I do not dissent from that view, but we have been presented with no evidence that the Bill constitutes the action that the public demand. My concern is that it has been rushed through in order to assuage public concern and may not be that well directed at achieving that. We were told that the offence that we were discussing on Report sends a clear signal to MPs. My concern is that it may be used simply to send a signal to constituents that something has been done. I am not at all clear about whether this is the action that should have been taken. It would have been better if we had had the time to discuss the Bill in some depth, so I reiterate my criticism of the process because we cannot discuss the substance without having the time to do so and to make sure that we are proceeding on the basis of clear evidence.
	Having said that, I get to my feet really to pay tribute to the Leader of the House, who has done an extraordinarily good job in responding to the concerns of the House. She has been receptive, has listened to what has been said and has operated as the Leader of the House, for which she deserves enormous credit. Although I am still very critical of the Bill, it is a less bad Bill as a result of what has been done in your Lordships' House. The noble Baroness has facilitated that enormously, so we should place on record all the hard work that she has done on the Bill on behalf of the House.

Lord Tyler: My Lords, I had intended to say much the same thing as the noble Lord, Lord Norton of Louth, in the Bill do now pass debate, but perhaps it would be more convenient to the House if I said something briefly now.
	Whatever criticism there may have been recently of Parliament, politicians and us in this House as well as Members of the other place, we should take some credit for the way in which this House has handled the Bill. Certainly we should give credit to the Leader of the House and her ministerial colleagues, who have done a very good job. While those of us who have been concerned about the fast-track procedure have complained about it, we cannot complain about the way in which she and her colleagues have sought to make the minimum of difficulty out of that considerable fast track. After all, the amendment was put together only earlier this evening. It has been with us for at least long enough for us to consider it carefully, and we should give full credit for that.
	We should also through the Leader of the House give our grateful thanks to her support team in the Box and to the Public Bill Office of this House. They have done a remarkable job. Perhaps we should also thank the computers. In the days before computers, the process that we have been able to handle at such speed today would surely have been impossible. All the staff of the House at this time of the year deserve our grateful thanks for the way in which a difficult situation has been faced. We have certainly greatly improved this legislation as a result.

Lord Palmer: My Lords, I, too, pay great tribute to the Leader of the House and echo the words of the noble Lords, Lord Norton of Louth and Lord Tyler. Speaking on behalf—if I may be so bold as to do so—of the second largest group in the House of Lords, I must say that the Leader of the House has done the most incredible job in changing this legislation and I hope that she will take on board all the very important points made by all of us throughout the House. I thank her and wish her a very happy and long Summer Recess.

Lord Strathclyde: My Lords, I, too, was going to save my few words for the Bill do now pass debate, but I will follow the custom of everyone else in speaking to the amendment. I welcome the amendment, which the noble Baroness rightly proposed on the suggestion of my noble friend, and I am sure that the Bill will be improved as a result of it.
	The Bill was born in the most unusual circumstances and immediately created more heat than light, which continued almost until the very end of its process through both Houses of Parliament. I suspect that none of us can tell whether it will have the desired effect. Over the past 15 years or so, there have been almost countless commissions, investigations, inquiries and Joint Committees to look at these great problems and I am not sure that we are any nearer finding the solution than we were before. In some respects, we may have made it even more difficult for Members of another place to stick to the rules and to attain the standards of integrity and probity that we all wish.
	As other noble Lords have said, it is unquestionable that the Bill that we return to another place is considerably better than the one that we received only a few days ago in parliamentary terms. I hope that another place will be grateful for the work that we have done and for the improvements that we have made.
	Of course, the professional politician has been with us for very many years over generations. It is right that we should continue to have people who have devoted their lives to politics. The complaint that people make inside and outside Parliament is that that balance almost has a ratchet effect in favour of more and more people who know almost nothing apart from politics. No doubt we can argue about the statistics. Anything that creates the impression that people who have had experience in politics, as researchers and such like, have the upper hand in being elected to another place is something that we need to correct.
	Everyone who has spoken has congratulated the noble Baroness the Leader of the House on taking on what was undoubtedly an extremely difficult and complicated task, not least because of the speed with which we did it. But the House has demonstrated its flexibility in being able to match up to the challenge of time. I thank the noble Baroness and her team. We have also had the noble Lords, Lord Bach and Lord Hunt of Kings Heath, and this afternoon we had a very special guest appearance from the Attorney-General. So well did she speak that I sat very firmly in my seat and did not pass comment on her words. Why would I have done when I had over one shoulder my noble and learned friend Lord Mackay of Clashfern and over the other Lord Kingsland, who is somewhere looking down on us and approving of everything that we have done? We have done a good job and I, too, join the noble Lord, Lord Palmer, in wishing everyone as from tomorrow afternoon a very happy Summer Recess.
	Amendment agreed.
	Motion
	 Moved by Baroness Royall of Blaisdon
	That the Bill do now pass.

Baroness Royall of Blaisdon: My Lords, in moving this Motion I hope that the House will allow me to express my thanks to noble Lords on all Benches who have participated in the proceedings on this Bill and have made such a huge contribution. I also take the opportunity to thank the Public Bill Office and especially the excellent Bill team who have really done us proud. They have had the most difficult job of all, which they have done splendidly.
	Like other noble Lords, I think that the way in which we have taken the Bill through this House has shown our House at its very best. It is a mixture of politics and pragmatism, a little bit of conflict and a great deal of consensus. We are all reaching for the common good, which is what we do in this House. I know that there was great concern about the lack of time that we had to debate and pass this Bill, but like other noble Lords I firmly believe that this is a much better Bill thanks to our amendments. In this House, we have all participated in some excellent debates, of which I am very proud. I am sure that the Bill that we are sending back to the other place will be instrumental in our efforts to regain the trust of the public in the other place and in our democracy. This Bill will create an independent, transparent and robust system of regulation. As a result of the amendments made in this House, there will now be a number of further safeguards, so we can be much more confident in the Bill as it passes.
	This Bill is just the first piece in the jigsaw. We are now keen to set up IPSA and the new regime as soon as possible. The responsibility passes to the other place, but your Lordships have played a vital role in ensuring that this legislation is truly fit now to go on to the statute book. I beg to move.
	Bill passed and sent to the Commons with amendments.

House adjourned at 10.54 pm.